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  • USD/INR steps back from the four-day top.
  • Hopes of US economic restart, absence of US-China threats trigger risk-on sentiment in Asia amid holidays as major bourses.
  • India’s budget gap likely breached February’s target amid lockdown.

With the risk reset in Asia helping Indian rupee, USD/INR pulls back from four-day high to 75.58 ahead of Tuesday’s European session. The pair might have taken clues from the broad US dollar pullback amid a lack of catalyst and receding safe-haven demand.

The US dollar prints mild losses versus major currencies as the global market aims for the US economic restart after upbeat comments from California and Washington. Also contributing to the broad risk-on sentiment could be an absence of any more US-China tussle news as well as the World Health Organization’s (WHO) comments suggesting no proof of the US allegations.

On the other hand, Indian markets are also retracing some of the losses as the government announced the easing of lockdown in some less-infected states with conditions. Also, expectations of further financial help from the Indian government offered additional support to the equities and the INR.

However, Bloomberg came out with the news suggesting that the nation’s budget gap for the year ended March 31 has touched 4.4% of gross domestic product. This breaches the target set in February as an economic slowdown reduced tax collections, as mentioned in the piece.

While portraying the risk-tone sentiment, BSE SENSEX gain over 0.90% to 31,986 whereas US stock futures also registers profits of the same size.

Looking forward, traders may keep eyes on the virus/trade updates for fresh impulse ahead of the US ISM Non-Manufacturing PMI for April, expected 32 versus 52.5 prior.

Technical analysis

Repeated failures to cross eight-day-old falling trend line, at 75.74 now, not to forget the 21-day SMA level of 76.10, keep directing the pair towards 50-day SMA level of 75.15. Though, the pair’s declines below 75.15 on a daily closing might not refrain from challenging the sub-74.50 area.