USD/INR eases above 85.00 as Rupee trims gains amid easing trade tensions

• Indian Rupee pares earlier gains as USD/INR rebounds slightly above 85.00.
• US Dollar steadies after a sharp early-week decline, DXY Index hovers above 99.00
• The final round of US-India trade deal talks is expected soon in New Delhi.

The Indian Rupee (INR) trims some of the earlier gains against the US Dollar (USD) on Monday, with the USD/INR pair retreating slightly above 85.00 during the American trading hours. The slight weakness in the Indian Rupee comes on the back of easing global trade tensions, which lent some support to a broadly weak US Dollar.

The Dollar Index (DXY), which measures the value of the USD against a basket of six major currencies, is recovering after hitting a four-week low at the start of the day. At the time of writing, the Index is holding steady, trading above the 99.00 mark as traders repositioned after US President Donald Trump backed away from his threat to impose a 50% tariff on European Union (EU) goods to the US from June 1. Following a phone call with European Commission President Ursula von der Leyen, Trump agreed to push the tariff deadline to July 9, in line with the previously announced 90-day truce. The shift has eased some immediate concerns and lent temporary support to the US Dollar.

On the trade front, the United States is set to send a high-level trade delegation to India in the coming weeks, aiming to seal a long-awaited interim trade agreement. According to sources cited by multiple Indian media outlets, this upcoming round of talks could be the final push to resolve sticking points between the two sides. 

India is seeking a full exemption from the additional 26% duties the US imposed earlier this year, particularly to shield its labor-intensive export sectors such as textiles, leather, and jewelry. The country is also pushing to reduce the existing 10% base tariff.

In return, India may consider allowing greater market access for American companies, including a potential opening of government procurement contracts, estimated to be worth over $50 billion.

Commerce Minister Piyush Goyal has already held two rounds of meetings in Washington with his US counterpart, signaling that both sides are committed to getting a deal across the finish line. A separate visit by India's chief negotiator last week also set the stage for this critical final round.