USD/INR stalls recovery just shy of 71.00 ahead of US data
- The spot recovered in tandem with the US dollar index.
- 71.00 remains a tough nut to crack for the bulls.
- Trade deal optimism fades as US data takes centre stage.
USD/INR is seen consolidating the recovery from a new five-week low of 70.68 reached on Wednesday, as the bears continue to guard the 71 barrier.
The comeback in the spot can be mainly attributed to broad-based US dollar rebound from nearly weekly lows, as the greenback regained poise amid fading optimism over the US-China phase one trade deal. Markets remain wary over the effectiveness of the trade deal, as several thorny issues still remain unaddressed amid talks of phase two negotiations getting underway.
The Indian rupee shaved-off early gains fuelled by increased foreign fund inflows and gains in the domestic equity markets, as the prospects of the US-China trade relations improve following the phase one trade deal.
The latest drop in the rupee to near 71.95 low vs. the US dollar is also due to downbeat India’s exports data. India's exports declined 1.8% in December to $27.36 billion, registering fifth straight monthly fall. Meanwhile, the Indian traders ignored the latest report that India is considering drafting a new law to safeguard foreign investment that would aim to attract more capital from overseas.
Markets now look forward to the US Retail Sales data for fresh dollar trades, as the US-China trade matter likely takes a back seat.
USD/INR Technical levels to consider