USD/INR: Mildly positive near 27-month top amid risk reset in Asia

• USD/INR struggles to keep the recent gains as risk aversion catches a breather.
• Downbeat Indian GDP, political pessimism in India also play their role.
• Coronavirus takes a toll on global trade sentiment, death toll crosses 3,000.

USD/INR registers 0.05% gains to 72.28 amid the initial minutes of the Indian markets open on Monday. Even if the broad risk reset seems to have pulled the pair back from the multi-month top, prices remain positive as the coronavirus fears are yet to recede.

The global death toll due to the deadly virus crossed 3,000 by the end of Sunday. That said, traders paid more attention to the two deaths that took place in the US due to the contagion. Also increasing the fears were numbers from South Korea and warnings uttered through global policymakers, including the Fed Chair, BOJ Governor, etc.

Also, February month PMI numbers from China also dropped to the record low, which in turn provided another push to the global policymakers towards easing their current monetary/fiscal policies.

With this, the US 10-year treasury yields retrace from the record low of 1.043 to 1.0930 whereas stocks in Asian are also recovering Friday’s losses amid hopes of further stimulus.

At home, India’s GDP growth for the quarter ending in December 2019 dropped to the seven-year low of 4.7% while raw over geopolitical tensions in the national capital Delhi continues to negatively affect the Indian rupee (INR).

Investors will now pay close attention to the US and Indian PMI data for near-term direction whereas coronavirus headlines will keep the driver’s seat.

Technical Analysis

A sustained break of December 2018 top surrounding 72.90 becomes necessary for the bulls to aim for 73.00, failures to do so can recall January month high near 71.85 back to the chart.