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  • USD/INR struggles to keep the previous day’s recovery moves despite recently bouncing off 73.42.
  • India and China jointly agreed to ease border tensions.
  • New Delhi marks the record daily jump in COVID-19 cases.
  • Indian Manufacturing-Industrial Output, US CPI will be in the spotlight.

USD/INR trims the early-Asia losses while taking rounds to 73.50 ahead of Friday’s European session. The quote gained the previous day as the US dollar regained its strength while the Indo-Sino border tussles strengthened the upside momentum.

Will the show of power end?

Despite agreeing to disengage troops near the Line of Actual Control (LAC), the market doubt that the Asian neighbors will go for peace. The reason could be the difference between the allies of both nations. While China was recently spotted hanging out with the Arab leaders, India has been cheered by the US, the UK and some other nations that stand against Beijing.

Another reason to expect the sooner end of peace is the ongoing trade war. India recently banned multiple Chinese apps while the other end is alleging Narendra Modi-led government’s military push to spoil the global peace.

Other than the low hopes of peace with the dragon nation, the surge in the coronavirus (COVID-19) also plays negative for the Indian rupee (INR). Having flashed the record-breaking jump in daily cases, above 95,000, the previous day, India’s new cases surged to 96,551 on Thursday. With this, the total count of the pandemic reaches to 4.56 million in the country.

On the contrary, risk reset in Asia-Pacific markets, questions the pair’s upside momentum. While portraying the market mood, S&P 500 Futures print 0.63% gains but India’s BSE Sensex drops 0.10% daily.

Traders may now await India’s July month Industrial Output and Manufacturing Output, expected -11.2% and -23.5% respectively, for fresh impulse. Also on the radar will be the US Consumer Price Index (CPI) data that is likely to recover to 1.2% from 1.0% in August. As a result, the anticipated US dollar strength and risk to market sentiment can keep fueling the USD/INR pair.

Technical analysis

An area between 73.95 and 74.00, including 21-day SMA, August 24 low and current month high, becomes the key short-term resistance for the pair. Meanwhile, 73.00 and the monthly bottom close to 72.75 can challenge the short-term sellers.