USD/INR looks for clear direction near 71.50, focus on India data/budget

• USD/INR snaps two-day winning streak amid cautious optimism in Asia.
• US GDP missed President Trump’s mark, coronavirus remains a hot topic.
• Indian GDP, Fiscal Deficit will decorate the economic calendar, Saturday’s Union budget will be the key.

USD/INR trades modestly flat near 71.50 while heading into the European session on Friday. In doing so, the quote refrains from the previous two-day rise as mildly positive trade sentiment confront cautious performance ahead of the key catalysts form India.

Coronavirus finally gets a tag of global emergency from the World Health Organization (WHO). However, the cautiously optimistic tone from the Geneva-based institute joins upbeat Chinese comments reset the risk-tone. Also contributing to the market’s momentum was official PMIs form China that failed to disappoint.

On Thursday, preliminary readings of the fourth quarter (Q4) US GDP matched 2.1% forecast but missed President Donald Trump’s 3.0% mark. Even so, fears of the virus outbreak continued to please the US dollar buyers.

That said, the US 10-year treasury yields recover from 16-week low to 1.59% whereas Asian stocks also mark small gains.

Annual GDP data for India’s 2018/19 growth figures and fiscal deficit for the April-December period will be the keys. Also important will be the speeches by Finance Minister Nirmala Sitharaman and Chief Economic Advisor Dr. KV Subramanian. While GDP is likely to remain below 6.8% prior, the fiscal deficit will pave the way for Saturday’s budget as the same is expected to widen and push the government towards asset monetization.

On the other hand, data from the US and headlines concerning China’s coronavirus will keep the traders entertained.

Technical Analysis

In addition to 71.80, 72.00 also limits the pair’s immediate upside while 13-day-old rising support line and 21-day SMA will confine short-term declines around 71.30/25.