The Indian Rupee (INR) experienced a decline on Tuesday, pressured by selling from foreign funds and a negative tone in domestic markets. The recent rise in crude oil prices, coupled with escalating geopolitical tensions between Israel and Iran, has further contributed to the currency’s weakness.
Traders are closely monitoring speeches from US Federal Reserve officials Raphael Bostic, Phillip Jefferson, and Susan Collins on Tuesday. Dovish comments from these Fed members could weigh on the US Dollar, potentially providing some support for the Rupee. Attention will also be on the Reserve Bank of India’s (RBI) interest rate decision scheduled for Wednesday.
Anuj Choudhary, Research Analyst at Sharekhan by BNP Paribas, noted, “We expect the rupee to trade with a negative bias due to selling pressure from foreign funds and a weak sentiment in domestic markets. The escalating tensions between Israel and Iran may further pressurize the rupee.”
Despite these challenges, India’s foreign exchange reserves rose by $12.588 billion, reaching a record high of $704.885 billion for the week ending September 27, according to the RBI. India’s Trade Minister Piyush Goyal recently stated that it is time for the INR to appreciate, supported by inflows in debt and equity markets.
Federal Reserve Bank of St. Louis President Alberto Musalem expressed support for more interest rate cuts as the economy remains healthy, but cautioned against excessive easing. Minneapolis Fed President Neel Kashkari highlighted the positive September jobs report, noting that the balance of risks has shifted from high inflation to the possibility of increased unemployment.
From a technical perspective, the outlook for the USD/INR pair remains constructive. The INR is trading weaker, but the USD/INR pair holds above the key 100-day Exponential Moving Average (EMA) on the daily chart, suggesting further upside potential. The 14-day Relative Strength Index (RSI) is above the midline at 60.70, indicating bullish momentum.
Key resistance for the USD/INR pair is found at the upper boundary of the trading range near 84.00. A sustained move above this level could attract buyers towards the all-time high of 84.15, followed by 84.50.
On the downside, the first support level to watch is 83.80, marking the low from October 1. Should bearish momentum persist, the pair could test the 100-day EMA at 83.66, with the next significant support level at 83.00, which represents a psychological round number and the low from May 24.
Related Topics:
