USD/INR clinches three-week tops above 71.00 on RBI rate cut calls, USD strength
- Increased odds of RBI rate cut next month drags Rupee lower.
- US-China trade uncertainty driven broad USD demand also weighs on the INR.
- Focus remains on trade-related developments and US data.
The USD/INR pair extends its rebound from five-week lows into a fourth day on Thursday, hitting fresh three-week highs of 71.12 some minutes ago.
The strength in the spot is mainly on account of two major catalysts; primary being the doubts over US-China trade deal-driven safe-haven buying in the US dollar across its main competitors. A fresh report on Wednesday rekindled fears about a delay in the US-China trade deal after the timing of the deal signing was pushed back to some time in December.
Market pricing 68% chance of an RBI rate cut on Dec 5
Meanwhile, the upside bias in the cross can be also attributed to the bearish bias seen around the Indian Rupee (INR) amid increased odds of a rate cut by the Reserve Bank of India (RBI) next month.
Further, the Indian currency also feels the heat of the slowing Indian economy and therefore the bias leans to the downside in the coming months, as highlighted by the latest Reuters poll. The poll reveals that over 40 strategists expect the Rupee to weaken about 1.3% to 71.90 against the greenback in 12 months.
Looking ahead, the sentiment around the cross will solely remain at the mercy of the USD dynamics amid looming US-China trade risks and ahead of the US macro news due later in the NA session today.
USD/INR Technical levels to consider