USD/INR drops below 21-day EMA for the first time in 6-weeks, all eyes on key India/US data

  • USD/INR weakens to the mid-August lows as Asian traders cheer US-China trade optimism.
  • Indian Industrial Output, the US CPI will be in the spotlight.

With the US-China efforts to placate trade war pessimists, USD/INR follows the suit of Asian traders and commodity-linked currencies while declining below the 21-day exponential moving average (EMA) for the first time in six-week. The quote flashes 71.38 by the press time prior to the Europe markets open on Thursday.

The US President Donald Trump respected China’s efforts to prepare for a good start to October trade meeting with a 15-day delay for fresh levies on $250 billion worth of Chinese goods. However, Financial Times’ news that the US is targeting companies with Chinese military ties could spoil the mood.

In addition to the earlier list of the US goods to be exempted from tariffs, readiness to import more farm products from the US and the Vice Premier Li’s positive attitude to avoid any trade tussle mark dragon nation’s proactive measures.

With this, risk tone got an additional boost with the Asian equities rallying and the US 10-year Treasury yields staying strong at a month’s high near 1.752%.

Investors will now keep an eye over the economic calendar as it offers July month Industrial Output, Manufacturing Output and Cumulative Industrial Output from India ahead of the US Consumer Price Index (CPI) data for August.

While the Manufacturing Output and Cumulative Industrial Output flashed 1.2% and 3.6% growth respectively, the headline Industrial Production is expected to register 2.3% growth versus 2.0% earlier. On the other hand, the US CPI isn’t expected to deviate from 1.8% on a YoY basis but may soften to 0.1% from 0.3% on MoM format. Additionally, CPI ex-Food & Energy, also known as Core CPI, can rise to 2.3% from 2.2% on a yearly basis but might decline to 0.2% from 0.3% on a monthly order.

Technical Analysis

Should the pair remains below 21-day EMA, the 50-day EMA level of 70.83 and August 08 low near 70.36 could please sellers ahead of offering them 70.00 round-figure. Alternatively, an upside break of 71.50 EMA resistance could again highlight the importance of 72.20 and 72.65 numbers to the north.

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