The Indian Rupee (INR) is losing ground on Friday as renewed demand for the US Dollar (USD) from importers for month-end payments and potential unwinding of long positions take their toll. However, a decline in crude oil prices and a positive trend in Indian equities may help mitigate the INR’s losses.
Market participants are keenly awaiting the release of the US August Personal Consumption Expenditures (PCE) Price Index, which is the Federal Reserve’s preferred measure of inflation. The headline PCE is projected to rise by 2.3% year-on-year, while the core PCE is estimated to increase by 2.7% year-on-year. Additionally, the Michigan Consumer Sentiment Index for September will be published later in the day.
According to Amit Pabari, managing director at FX advisory firm CR Forex, “Over the week, the (dollar-rupee) pair has opened lower, only to rebound as importers rush to meet month-end dollar demand, causing USD/INR to close higher.”
In other economic indicators, US weekly Initial Jobless Claims for the week ending September 21 rose to 218,000, up from the previous week’s revised figure of 222,000, which was initially reported as 219,000. This new figure was below the market consensus estimate of 225,000.
In India, the Sensex soared by 666.25 points to reach a record high of 85,836.12, while the Nifty climbed 211.90 points, hitting a new high of 26,216.05. Meanwhile, US Durable Goods Orders remained flat in August, contrasting with a 9.9% rise in July and exceeding expectations of a 2.6% decline. The US Gross Domestic Product (GDP) growth for the second quarter (Q2) was confirmed at an annual rate of 3.0%, as per the US Bureau of Economic Analysis.
Fed Governor Lisa Cook indicated her support for last week’s 50 basis point interest rate cut as a measure to address rising “downside risks” to employment, according to Reuters.
Technical Analysis: Bearish Outlook for USD/INR Remains
The Indian Rupee continues to weaken today, with the USD/INR pair maintaining a bearish outlook on the daily chart. The price remains below the key 100-day Exponential Moving Average (EMA), reinforcing the downward momentum. The 14-day Relative Strength Index (RSI) is currently situated below the midline at 39.30, suggesting that further declines are possible.
The recent low from September 23 serves as an initial support level for the USD/INR pair. If trading remains below this level, the pair could drop to 83.00, a significant psychological mark that also corresponds to the low recorded on May 24.
On the upside, a decisive move above the 100-day EMA at 83.62 could set the stage for a retest of the support-turned-resistance level at 83.75, with the round figure of 84.00 acting as an additional upside target to monitor.
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