On Thursday, the Indian Rupee (INR) continued its downward trajectory, despite the decrease in the value of the US Dollar (USD). This trend is attributed to mounting speculation that the US Federal Reserve (Fed) will postpone interest rate cuts, thereby bolstering the Greenback against its global counterparts. However, the potential for further appreciation of the USD/INR pair is limited due to a concurrent decline in crude oil prices, driven by easing tensions surrounding potential conflict between Iran and Israel.
Investors are closely monitoring key economic indicators, including the US preliminary Gross Domestic Product (GDP) Annualized for the first quarter (Q1), which could provide insights into the strength of the US economy and influence the Fed’s future monetary policy decisions. Additionally, market participants are awaiting the final reading of the US March Personal Consumption Expenditures Price Index (PCE) on Friday. Meanwhile, attention remains focused on India’s ongoing general election, spanning from April 19 to June 1.
Daily Digest Market Movers:
India’s foreign exchange reserves stood at USD 564.5 billion in mid-April, reflecting a year-on-year increase of USD 48 billion, equivalent to more than 7.6 months of goods and services imports.
The Indian rupee has exhibited stability at the onset of the election period, demonstrating resilience compared to other Asian currencies. Since the beginning of April, it has only depreciated by 0.6% against the US Dollar.
The Reserve Bank of India (RBI) monthly bulletin highlights the imperative for the Indian economy to achieve a growth rate of 8–10% annually over the next decade to fully capitalize on the demographic dividend.
Economists surveyed by Reuters identify unemployment as the primary economic challenge for the Indian government post-election, with India’s fiscal expansion forecasted at a solid 6.5% for the current fiscal year.
US Durable Goods Orders surged by 2.6% month-on-month (MoM) or $7.3 billion in March, marking the largest increase since November 2023. However, Durable Goods Orders excluding Transportation rose by a modest 0.2% MoM, falling short of consensus expectations.
Technical Analysis: USD/INR Outlook
While the Indian Rupee trades with a weakened stance, the USD/INR pair maintains a bullish outlook on the daily timeframe, supported by its position above the key 100-day Exponential Moving Average (EMA). Despite this, the 14-day Relative Strength Index (RSI) suggests a potential period of consolidation, as it hovers around the 50.00 midline.
Upside barriers for USD/INR are anticipated at 83.50 (high of April 15), with further potential targets at 83.72 (all-time high) and 84.00 (round figure). Conversely, downside support levels include the 83.10–83.15 zone, marked by the confluence of the 100-day EMA and a low of April 10, followed by 82.78 (low of January 15) and 82.65 (low of March 16).
