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  • USD/INR rises on risk-off, Mid-East tensions driven USD gain.
  • The 4% rally in oil prices weigh heavily on the Indian rupee.
  • Awaits US economic data for fresh trading impulse.

Having witnessed a 30-pips bullish opening gap this Friday, USD/INR posted fresh four-week highs at 71.753 last hour, currently consolidating the upside near 71.70 region.

The pair trades 0.50% higher so far, mainly buoyed by broad-based US dollar strength amid a flight to safety following a major US-Iran escalation. The US launched a missile attack on Baghdad airport and killed key Iran military personnels, including the Quds Force Commander, Soleimani. At the press time, the US dollar index rises to 96.87 highs, recovering from the Asian session lows of 96.71.

The US/ Mid-East geopolitical tensions flared up and prompted a 4% rally in oil prices, in the wake of increased supply threats from OPEC’s No. 2 exports, Iran. The surge in oil prices rendered INR negative, which collaborated with the recent strength in the pair.

Meanwhile, a dealer with an Indian state-run bank said: “For the day, 71.73 remains a crucial level for USD/INR and any a break of such crucial level can take the pair towards 71.80-71.85 levels in late trade.”

Given that, the level is already taken out and hence the cross now risks a test of the 72 handle should it clear the 71.80 resistance zone. Also, the further upside remains at the mercy of the USD price-action amid Mid-East headlines and ahead of the US macro news and FOMC minutes.

USD/INR Technical levels to consider