USD/INR extends post-India budget gains to 71.60 as full markets return

• USD/INR registers four-day winning streak.
• Indian government’s Union Budget failed to please investors.
• China’s return after Lunar New Year holidays, downbeat data weigh on Asian markets and currencies.

USD/INR trades modestly positive around 71.60 during the pre-European session on Monday. The pair keeps the latest gains, mainly earned through the Indian Union Budget and fears of China’s coronavirus outbreak, as the return of Chinese traders spread pessimism through the Asian traders.

China’s return to markets for the first time after January 23 failed to provide any support to the Asian bourses. Rather, bears cheered downbeat statistics from the dragon nation and Beijing’s failure to tame the epidemic to magnify the risk-off.

In doing so, the US 10-year treasury yields stay mostly sluggish while markets in Asia keep the red with their Chinese counterpart struggling to manage after 9% initial losses.

At home, despite vowing to boost the income of Indians and their purchasing power, the Bharatiya Janta Party-led (BJP) government’s budget is mostly termed as sluggish. Reuters relied on economists to convey that India’s new federal budget is unlikely to drag Asia’s third-biggest economy out of its worst slowdown in more than a decade as the government has proposed only moderate spending increases and small cuts in personal taxes.

Although the Reserve Bank of India (RBI) isn’t expected to announce any monetary policy changes during its Thursday’s decision, a bearish bias can’t be ruled out. After the RBI, traders will also keep eyes on China’s trade numbers and the US employment data for fresh impulse.

Technical Analysis

A confluence of 21, 50 and 100-day SMA near 71.30/27 offers strong support to the pair, which in turn increases the odds of its run-up to 72.00 round-figure.