On Monday, the Indian Rupee (INR) ended its recent winning streak, though the upside potential for the USD/INR pair may be limited due to positive momentum in Indian equity markets, driven by substantial foreign fund inflows. However, rising crude oil prices and renewed demand for US Dollars (USD) from importers could put additional pressure on the local currency.
Market participants are closely monitoring the upcoming flash reading of the US Purchasing Managers’ Index (PMI) data for September. Additionally, speeches from Federal Reserve Bank of Chicago President Austan Goolsbee and Atlanta Fed President Raphael Bostic later today may influence USD sentiment. Any signs of weaker US economic performance or dovish commentary from Fed officials could further undermine the Greenback.
Market Movers: INR Depreciates Amid Caution Before US PMI Data
The HSBC India Manufacturing PMI decreased to 56.7 in September, down from 57.5 in the previous month. Meanwhile, India’s foreign exchange reserves reached an all-time high of $689.458 billion, reflecting a $223 million increase, according to data released by the Reserve Bank of India (RBI).
S&P Global projects that India could become the world’s third-largest economy by 2030–2031, with an anticipated annual growth rate of 6.7%.
Philadelphia Fed President Patrick Harker recently acknowledged the Fed’s effective navigation of a challenging economy, while also noting risks of a stalled decline in inflation and a potential softening of the labor market. Fed Governor Michelle Bowman expressed concern that a half-percentage point rate cut could prematurely signal victory over inflation. Conversely, Governor Christopher Waller supported the recent rate cut, indicating flexibility in future moves based on economic data.
Technical Analysis: USD/INR Shows Oversold Conditions
The USD/INR pair is currently exhibiting a bearish outlook, remaining below the critical 100-day Exponential Moving Average (EMA) on the daily chart. While further consolidation is possible, the 14-day Relative Strength Index (RSI) at 26.40 suggests oversold conditions, indicating potential for a near-term correction.
The 100-day EMA at 83.62 serves as the initial resistance level for USD/INR, while the psychological barrier of 84.00 poses additional challenges for bulls. On the downside, support is found at the June 19 low of 83.30, with further declines potentially reaching the round number of 83.00.
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