USD/INR: Interim trade deal caps near-term INR gains – MUFG

💡 DMK Insight

The US–India trade deal could shift the USD/INR dynamics significantly. With tariff cuts and exemptions on the table, India’s external position looks stronger, which might lead to a temporary dip in USD/INR below 90. However, don’t get too excited—Michael Wan suggests that any recovery in the INR will likely be shallow. This means traders should be cautious about positioning for a long-term bullish trend in the rupee. Instead, watch for volatility around the 90 mark, as a break below could trigger short-term buying interest but may not sustain. Keep an eye on related markets, especially commodities that India imports heavily, as they could influence the INR’s strength. If global commodity prices rise, it could counteract any benefits from the trade deal, leading to a more complex trading environment. The real story here is the balance between short-term gains and long-term fundamentals, so stay alert for any shifts in sentiment or economic data that could impact these forecasts.