USD/INR hits three-day lows near 71.50, focus shifts to RBI
- Rupee rises on foreign banks’ dollar sales, short-covering ahead of RBI.
- Renewed USD selling amid trade and growth worries also weigh.
The Indian rupee extends gains for the second straight day on Tuesday, as USD/INR retreats further from five-day highs of 71.87 reached last Friday. At the time of writing, the spot has managed to bounce off the 71.50 support and trades near 71.65 region, +0.10% on the day.
The recent strength behind the rupee is mainly induced by increased foreign banks’ dollar sales. According to a dealer with an Indian private bank, “Rupee is trading with a positive bias due to flows and weakness in the dollar index. We expect the range-bound move to continue for the rest of the session due to lack of any fresh cues for the day.”
Further, broad-based US dollar weakness, in the wake of negative US factory data and US President Trump’s concerns over a stronger dollar, collaborates to the downside bias in the pair. Also, a short-covering rally in the rupee cannot be ruled, as markets resort to profit-taking, with the two-day Reserve Bank of India (RBI) monetary policy review meeting having commenced.
Markets now await the RBI monetary policy decision for fresh direction on the rupee. In the meantime, the US-China trade-related headlines and USD dynamics will continue to influence the currency.
USD/INR Technical levels to consider
Author
Dhwani Mehta
FXStreet
Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.
