USD/INR drops to test key support near 71.50, US data in focus
|- Rupee tracks the yuan rise on fresh trade deal optimism.
- Broad USD strength to keep the losses limited ahead of US Services PMIs?
The USD/INR cross came under fresh selling pressure in the European session and hit fresh session lows of 71.57, having faced rejection near 71.80 region for the fourth straight session on Wednesday.
The rupee picked up fresh bids and bounced nearly 20-pips, as it tracked the sudden rally in the Chinese yuan. This last one was fuelled by a Bloomberg report saying that US and China are moving closer to agreeing on the number of tariffs that would be rolled back in phase-one trade deal despite tensions over Hong Kong and Xinjiang. The renewed US-China trade optimism offered fresh signs of life to the Asian currencies.
The latest leg in the spot appears limited, as broad-based US dollar strength could help cushion the downside. Further, expectations of a sixth rate cut this year by the Reserve Bank of India (RBI), in an effort to boost growth, are likely to keep the rupee gains in check. The two-day Reserve Bank of India (RBI) monetary policy review meeting has commenced earlier today, with the decision due on Thursday at 0615 GMT.
In the meantime, the trade-related news and US economic releases will offer fresh trading cues.
USD/INR Technical levels to consider
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