- Rupee tracks the Chinese yuan higher amid fresh trade optimism.
- USD/INR tests 71.60 key support amid rising odds of RBI rate cut next month.
- Focus remains on trade-related developments and US macro data.
The USD/INR pair is seen on the back foot near four-day lows of 71.609, starting out this Tuesday’s business, as the rupee benefits from the rise in its Chinese peers on fresh trade talks momentum. Both US and Chinese top trade negotiators held a phone call earlier today and reached a trade consensus on resolving the issues.
However, the downside in the spot remains limited, as markets still remain jittery over a potential phase one trade deal and continue to underpin the safe-haven demand for the US dollar when compared to its main rivals. The US dollar index keeps its range near-weekly tops of 98.38, now trading flat on the day.
Further, the increased odds of a rate cut by the Reserve Bank of India (RBI) next month are likely to rescue the USD/INR bulls. According to the latest Reuters poll of more than 70 economists, the Reserve Bank of India (RBI) is expected to cut its repo rate for the sixth time in a row by 25 basis points to 4.90% at its Dec. 3-5 meeting. The economists believe that the rate reductions would either marginally boost the Indian economy or have no impact.
In the day ahead, the sentiment around the cross will be mainly influenced by the US-China trade developments driven USD price-action, as the focus shifts towards the US macro news due later in the NA session today.
USD/INR Technical levels to consider
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