- USD/INR probes three-day winning streak as the absence of the US-Iran war, fresh trade headlines pleased the Asian buyers.
- Risk reset needs to be confirmed as the last headlines from the US and the Middle East fail to respect the global push for peace.
USD/INR declines to 71.72 ahead of the European session on Tuesday. The pair surged to the two-month top on Monday amid broad USD strength and fears of the US-Iran war. However, the absence of any major negative developments and broadly upbeat Markit Composite data seem to trigger the latest pullback.
The latest headlines concerning the US-Middle East tension suggest that the Trump administration is preparing for Iraq sanctions while Iran’s revolutionary guard commander spread war threats. Even so, market players are concentrating more on the absence of any major revolt on Monday, backed by global policymakers, than the odds of such outcome.
Also supporting the risk reset is the latest headlines concerning the US-China phase-one deal that signal both the nations are on track for a deal and diplomats from Beijing will visit the US sometime in the next week.
With this, Asian stocks remain mildly bid whereas the US 10-year treasury yields recover to 1.82%.
Looking forward, traders will keep eyes on the political headlines as the major driver while the US ISM Non-Manufacturing PMI could entertain markets ahead of Friday’s key jobs report.
Technical Analysis
A five-month-old falling trend line, at 72.20 now, holds the key to pair’s further upside. Meanwhile, an ascending support line stretched from December 11 can limit short-term declines around 71.20.
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