The Indian Rupee (INR) continued its decline on Wednesday, pressured by the overall weakness of Asian currencies and heightened demand for the US Dollar (USD) from importers. However, the local currency’s losses may be moderated by favorable domestic market conditions and dovish remarks from Federal Reserve Chair Jerome Powell at last week’s Jackson Hole meeting.
Later on Wednesday, Fed officials Christopher Waller and Raphael Bostic are set to speak, with their comments likely to impact market sentiment. Additionally, the US is expected to release its advanced Gross Domestic Product (GDP) figures for the second quarter (Q2) on Thursday, with a projected growth rate of 2.8%. On Friday, attention will shift to the US Personal Consumption Expenditures (PCE) Price Index and India’s GDP data for the first quarter (Q1) of fiscal year 2024-25 (FY25).
Daily Digest: Market Movers and Economic Indicators
The International Monetary Fund (IMF) forecasts India’s real GDP growth will reach 7% in 2024, maintaining its position as the fastest-growing major economy globally. However, a Reuters poll suggests India’s economic expansion for the April-June quarter is expected to slow, attributed to reduced government spending.
In the US, the Conference Board’s Consumer Confidence Index rose to 103.3 in August from a revised 101.9 in July, reaching a six-month high. Meanwhile, the Federal Housing Finance Agency reported a 0.1% month-over-month decline in the US House Price Index for June, better than the anticipated 0.2% increase.
Market expectations indicate a near 34.5% probability of a 50 basis point cut in interest rates, according to the CME FedWatch Tool.
Technical Analysis: USD/INR Outlook
Despite the Indian Rupee’s current weakness, the technical outlook for the USD/INR pair remains positive. The price is holding above the critical 100-day Exponential Moving Average (EMA), with the 14-day Relative Strength Index (RSI) remaining above the neutral level at 58.00, suggesting strong support.
The immediate resistance for USD/INR is at the psychological level of 84.00. A sustained move above this resistance could lead to the next target near the record high of 84.24 and potentially to 84.50.
Conversely, if the pair falls, the low of August 20 at 83.77 will serve as the initial support level, with further declines possibly exposing the 100-day EMA at 83.60.
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