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USD/INR retraces from four-month top to 72.00 amid geopolitical plays

  • USD/INR stays mildly positive after the fresh risk-on.
  • The pair surged to 2019 high after Iran’s operation “Martyr Soleimani”, pulls back as the US avoids immediate reaction.
  • Headlines concerning the US-Iran war will be the key while US ADP could entertain traders.

USD/INR consolidates gains to 72.00 while heading into the European open on Wednesday. The pair initially rose to a four-month high of 72.57 as Iran attacked the US airbases in Baghdad. Though, buyers booked profits as the US President said, “All is Well!”

Iran’s attack on two US military bases in Iraq triggered the market’s rush to risk-safety during the early Asian session. The Middle East nation announced it as retaliation to the US killing of Quads Force leader Qasem Soleimani.

Even so, the losses seem to have been limited, as per the US, which in turn might have pushed the US to refrain from any immediate action. Also contributing to the risk recovery could be Iran’s readiness to stop the attacks if the US doesn’t retaliate as well as requests from China to exercise such restraint.

As a result, the US 10-year treasury yields bounce off the low of 1.707% to 1.786% by the press time. The pattern could also be witnessed in Asian stocks and gold.

On the domestic front, the Indian government announced measures to simplify the taxation system while the country’s central bank, Reserve Bank of India (RBI), for the first time, plans to auction weak private sector banks. Further, ‘Bharat Bandh’ on January 08 seems to negatively affect the sentiment at home.

The US President Donald Trump is up for speaking on the matter during the day and will very much affect the market sentiment. Additionally, the US ADP Employment Change, expected 160K versus 67K prior, could also offer the pair’s moves.

Technical Analysis

A sustained break beyond the year 2019 high near 72.65 becomes necessary for the pair to aim for December 2018 top surrounding 72.82 and 73.00 round-figure. On the contrary, December 27 high around 71.55 serves as the immediate support.

 

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