USD/INR in a phase of bullish consolidation around 71.20

• USD/INR cheers USD strength, ebbing fears of the China virus spread.
• Weaker Indian stocks offset the impact of falling oil prices on the rupee.
• Focus shifts to US macro news amid risk recovery.

Having reached a one-week high on Tuesday, USD/INR holds the higher ground while consolidating above the 71 level so far this Wednesday.

The spot is seen wavering back and forth in a 10-pips narrow range around 71.20 region, with the downside cushioned by broad-based US dollar strength, as the risk sentiment improves amid subsiding fears over China’s coronavirus outbreak.

Meanwhile, falling Indian stocks amid dwindling domestic growth prospects and increasing stagflation risks weigh on the rupee, in turn, supporting the upbeat tone seen around the cross.

However, USD/INR is seen struggling to extend the upside, as the oil-price weakness comes to the rescue of the INR bulls. The black gold remains under pressure amid expectations of ample global supply.

Looking ahead, the bullish bias remains intact for the pair as long as it holds above the 71 handle, as Indian traders now eagerly await India's federal budget due on Feb. 1 for fresh direction.

In the meantime, the spot will take cues from the broader market sentiment and the upcoming US housing data.

USD/INR Technical levels to consider