USD/INR darts higher as India exports rise amid the pandemic

The USD/INR tilted higher on Tuesday even after India published relatively encouraging preliminary trade numbers from India. The pair rose to 73.32, which was the highest it has been since May 18. 

India exports jumped in May

India has been in the headlines in the past few months as the number of coronavirus cases has continued to surge. The country has confirmed more than 28.3 million infections and more than 335k deaths. The latest data showed that the country added more than 133k new cases on Tuesday and more than 3,200 deaths.

Yet the country’s business seems to be ding well, as evidenced by the latest trade numbers. According to the country’s statistics agency, exports rose from $30.63 billion in April to $32.2 billion in May. In the same period, imports declined from more than $45.72 billion to $38.53 billion. This led to a sharp decline of the trade deficit, which narrowed from $15 billion to $6.32 billion. Analysts were expecting the deficit to widen to more than $15.20 billion.

The USD/INR also reacted to news that the country and the UK are intensifying their trade talks to remove non-tariff barriers and boost access. The two nations have identified a few items that are achievable in the near term. The goal is to have a deal by the end of the year. The deal will give the UK access to the vast Indian market especially for its products like medical devices and apples. It will also give Indian nurses and seafarers more access to the UK.

The Indian rupee has gained against the dollar in the past month because of the rising inflows of cash to support the country as it sees more cases.

USD/INR technical analysis

The four-hour chart shows that the USD/INR pair formed a double-top pattern at 75.47 between April and May. The neckline of this double-top was at 74.28. The pair dropped by more than 4% from the highest level April 21 and May 28. 

In the past few days, the pair has bounced back by more than 1% as traders wait for the upcoming US non-farm payroll numbers. The 25-day and 50-day moving averages are close to forming a bullish crossover pattern. It has also risen above the 78.6% Fibonacci retracement level. Therefore, the pair may keep rising as bulls target the 61.8% retracement level at 73.51.