USD/INR gaps higher on Indo-Pak tensions

Rupee opens lower in early trade, possibly due to reports of Indian airstrike on targets in Pakistan.
USD/INR could remain bid on escalating Indo-Pak tensions. The upside, however, could be capped if Fed's Powell sounds dovish during his testimony to Congress.

Omkar Godbole FXStreet Contributor

Indian rupee took a hit in early trade on Tuesday, possibly due to escalating tensions with arch-rival Pakistan.

USD/INR gapped higher 71.26 and hit a high of 71.32 before falling back to 71.23. The currency pair had closed yesterday at 70.97.

Reports hit the wires earlier today stating that Indian airforce targeted areas in Pakistan. The tensions between the two nations escalated following the dastardly Pulwama terror attack on Indian forces on Feb. 14.

While the rising tensions with Pakistan will likely keep INR on the defensive, dovish comments from Fed Chairman Powell could limit the downside.

The US Fed Chairman Powell will at Capitol Hill today to testify before Congress. Powell is likely to reiterate caution on interest rates and may offer clues on how the Fed plans to end its quantitative tightening program.

Technical Levels

1. R3 71.4733
2. R2 71.3367
3. R1 71.0883
PP 70.9517
1. S1 70.7033
2. S2 70.5667
3. S3 70.3183

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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