The Indian Rupee (INR) exhibited a modest uptrend on Friday despite the resurgence of the US Dollar (USD). This resilience is attributed to India’s robust business sector growth in May, coupled with notable gains in exports and job creation rates. Furthermore, the INR found support from a decline in crude oil prices, given India’s status as the world’s third-largest oil importer and consumer.
Investor attention on Friday centers around key US economic indicators such as Durable Goods Orders, the Michigan Consumer Sentiment Index, and a speech by Federal Reserve (Fed) official Waller. Positive data and hawkish remarks from Fed representatives could bolster the USD and mitigate downward pressure on the INR. Additionally, anticipation of foreign capital outflows ahead of India’s upcoming election outcome may influence the currency‘s performance.
In the realm of market movements, India’s flash HSBC Composite PMI for May registered at 61.7, marking the third strongest reading in nearly 14 years and continuing a streak of growth for the 34th consecutive month. While the Indian Manufacturing PMI declined slightly to 58.4, the Services PMI surged to a four-month high of 61.4.
Meanwhile, preliminary US S&P Composite PMI surpassed expectations, reaching 54.4 in May, the highest level since April 2022. The US Manufacturing PMI also saw an uptick to 50.9, while Services PMI surged to 54.8.
Additionally, US Initial Jobless Claims for the week ending May 18 decreased to 215K, below both the previous week’s reading and market expectations.
From a technical standpoint, the USD/INR pair shows vulnerability on the daily timeframe, forming a Head and Shoulders pattern since March 21. The price hovers around the key 100-day Exponential Moving Average (EMA) and neckline, with a breach below indicating potential downside momentum. The 14-day Relative Strength Index (RSI) hovering around 42.30 suggests further consolidation or downside movement.
A decisive close below the confluence of the 100-day EMA and neckline at 83.20 could pave the way for levels around 83.00 and 82.78. Conversely, a breakout above the right shoulder of the Head and Shoulders pattern at 83.54 could invalidate the chart pattern, attracting buyers towards levels around 83.72 and 84.00.
