- USD/INR stays mildly negative in a reaction to the Fed’s dovish pause.
- Uncertainty surrounding the US-China trade deal keeps the INR gains in check.
- Second-tier India data can offer intermediate moves.
USD/INR logs in the four-day losing streak while trading around 70.70 ahead of the European session on Thursday. The pair initially benefited from the US Federal Reserve’s (Fed) cautious tone concerning the 2020 rate cuts but fears of trade war keep the downside limited.
Despite announcing no change to its current monetary policy, the US Fed Chairman Jerome Powell’s comments provided broad weakness to the US dollar (USD). Also challenging the Fed’s hawkish sentiment could the dot-plot that mentions no rate hikes in 2020.
On the trade front, the United States (US) President Donald Trump is readying for the December 15 deadline. China, on the other hand, criticizes the Trump administration while demanding the cancellation of upcoming tariffs to continue discussing the future trade deal.
While the Fed’s move offered an initial flight to Asian currencies, fears of a full-fledged trade war between the US and China kept the US 10-year treasury yields confined around 1.80%. Also limiting the pair’s declines are comments from China’s Industry ministry that raised doubts on the growth of the Asian leader.
Moving on, India’s October month Industrial Output, expected -5.0% versus -4.3%, could offer intermediate direction to the pair while major attention will be on the trade headlines.
Technical Analysis
Unless extending losses below 70.35, comprising lows marked in August, prices are less likely to visit 70.00. On the upside, 10-day Simple Moving Average (SMA) near 71.25 can keep the pair’s recovery limited.
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