USD/INR consolidates gains to 71.20 amid a lack of major drivers

• USD/INR struggles for direction after rising the previous day.
• Chinese headlines keep the risk tone heavy but the year-end trading lull limits the market’s reaction.
• Second-tier US data, trade/political headlines can entertain short-term traders.

USD/INR seesaws around 71.20 as the Indian markets open for trading on Tuesday. The pair earlier benefited from the downbeat US data and doubts over phase-one optimism. Even so, the recent headlines from China fail to register major moves amid a year-end holiday mood.

China’s Global Times spread various worrisome headlines that doubt future trade/political relations between the US and Beijing. Among them, the latest one signaling the direct dislike for the US interference in Taiwan, Hong Kong and Xinjiang issues gain the top spot.

While the pair traders fail to offer any major reaction to the Chinese headlines, the US 10-year treasury yields fail to extend the previous day’s recovery while taking rounds to 1.92% by the press time. Also portraying the risk aversion are the stocks in Asia that are mildly negative amid thin trading conditions

It’s worth mentioning that the sharpest decline by the US Durable Goods Orders since May contributed majorly to the pair’s run-up during the previous day.

Looking forward, a lack of economic details on the calendar, except for the US Richmond Manufacturing Index for December, could keep prices range-bound. Though, any strong reaction to the recent Chinese news by the US can offer liquidity during the later part of the day.

Technical Analysis

In addition to the multiple key Simple Moving Averages (SMAs) around  71.40, a descending trend line since mid-November, around 71.60, will also limit the pair’s near-term upside. On the contrary, 71.00 can act immediate support.