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  • USD/INR fails to hold fresh six-month high after the Indian Rupee (INR) strengthened across the board.
  • Indian government waived budget surcharge on the FPIs.
  • The market mood turned positive amid the absence of escalation in Hong Kong crisis, trade-positive headlines during the Asian session.

With the Indian government measures boosting the INR, the USD/INR pair fails to hold on to the previous run-up towards late-February highs as trading around 71.10 while heading into the European market open on Tuesday.

The Indian government waived budget surcharge on Foreign Portfolio Investments (FPI) and pleased the INR buyers on early-day. However, pair’s losses were limited as the US-China talks in Beijing dragged upon Kashmir issue.

During the early Asian session, receding tension concerning Hong Kong protests and expectations of the US-China trade talks in September, coupled with upbeat headlines from South Korea and welcome business survey data from Australia, triggered fresh risk-on sentiment.

As a result, the US treasury yields recover from multi-month lows. However, Asian equity markets remain suppressed.

Investors will now await the US inflation numbers, coupled with key trade/political headlines, in order to forecast near-term market direction.

Technical Analysis

May month high near 71.00 becomes immediate support to watch as a break of which can drag prices to Thursday’s bottom of 70.36 and then to June month top surrounding 70.12. Alternatively, February month high near 71.92 holds the key to pair’s run-up towards December 2018 peak near 72.82.