The Indian Rupee (INR) has ticked lower against the US Dollar (USD) for the second consecutive day on Tuesday, pushing the USD/INR pair back toward the 100-day Simple Moving Average (SMA) resistance near the 83.65 mark. A modest rise in US Treasury bond yields has revived demand for the USD, acting as a supportive factor for the currency pair.
However, expectations for a significant interest rate cut by the Federal Reserve (Fed) may cap USD gains and limit INR losses, leading traders to adopt a cautious stance ahead of upcoming speeches by FOMC members and the US Personal Consumption Expenditures (PCE) Price Index data due on Friday.
Market Overview: USD Demand Pressures INR
The flash HSBC India Manufacturing Purchasing Managers Index (PMI) fell to 56.7 in September from 57.5, while the Services PMI dropped to 58.9 from 60.9. Pranjul Bhandari, chief economist at HSBC India, noted that this reflects the slowest growth seen in 2024. Additionally, comments from Fed officials suggest a likelihood of further rate cuts, which may influence market dynamics.
The US Manufacturing PMI unexpectedly fell to a 15-month low of 47.0 in September, while the Services PMI eased slightly to 55.4, above market expectations.
Technical Analysis: USD/INR Tests 100-Day SMA
The USD/INR pair maintains a bearish outlook on the daily chart, lingering below the 100-day Exponential Moving Average (EMA). The 14-day Relative Strength Index (RSI) indicates bearish momentum near 33.70, suggesting potential further declines.
Initial support is identified at 83.30, the June 19 low, with the next critical level at the psychological mark of 83.00. On the upside, immediate resistance is seen near the 100-day EMA at 83.68. A sustained move above this level could lead to a rally toward the key resistance at 84.00.
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