On Tuesday, the Indian Rupee (INR) showed resilience, bolstered by a weakening US Dollar (USD) across global markets. Positive inflows associated with the inclusion of Indian bonds in the JPMorgan emerging market debt index provided additional support to the INR. However, the currency’s upward momentum may be tempered by declines observed in major Asian currencies like the Chinese Yuan and Japanese Yen. Moreover, rising crude oil prices, driven by anticipated robust summer driving demand, pose a potential challenge for the INR, given India’s status as the world’s third-largest oil consumer.
Meanwhile, upcoming US economic indicators, including the Chicago Fed National Activity Index for May and Consumer Confidence data, are expected to guide investor sentiment throughout the week. Federal Reserve officials Lisa Cook and Michelle Bowman are scheduled to deliver speeches, with market participants keenly awaiting insights amidst ongoing economic developments.
In domestic news, S&P Global Ratings maintained India’s growth forecast at 6.8% for FY25, citing increased government spending and elevated interest rates boosting demand in non-agricultural sectors. Additionally, projections from the Indian Economic Advisory Council suggest India could surpass Japan to become the world’s fourth-largest economy by early next fiscal year, reaching a milestone of $4 trillion.
Addressing monetary policy, San Francisco Fed President Mary Daly emphasized the Federal Reserve’s commitment to achieving price stability without disrupting economic stability, noting ongoing efforts to manage inflation risks.
Looking ahead, technical analysis indicates that the USD/INR pair continues to maintain a positive stance above its 100-day Exponential Moving Average (EMA) on the daily chart. The 14-day Relative Strength Index (RSI) hovering around the 50-midline suggests potential for further consolidation in the near term. Upside movements could target levels around 83.75 and potentially reach psychological barriers at 84.00 and 84.50, contingent upon sustained bullish momentum. Conversely, downside movements may find support near 83.30-83.35, characterized by a confluence of former resistance turned support and the 100-day EMA, with additional support near the 83.00 mark.
The evolving global economic landscape and upcoming US economic data releases are anticipated to influence the trajectory of the INR against the USD in the days ahead.
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