The Indian Rupee is facing downward pressure on Tuesday as the US Dollar gains strength. This is partly due to the weaker Chinese Yuan and slower economic growth in China. However, the INR is supported by significant inflows of foreign funds into India, as well as increasing chances of a rate cut by the US Federal Reserve in September. Additionally, falling crude oil prices benefit the INR, as India is one of the world’s largest oil consumers. Investors are keeping an eye on the US Retail Sales for June and a speech by the Fed’s Adriana Kugler to gauge market sentiment.
India’s Wholesale Price Index (WPI) Inflation rose to a 16-month high of 3.36% YoY in June, exceeding expectations. This increase was mainly driven by higher prices of food items, fuel, and other manufactured goods. Meanwhile, Fed Chair Jerome Powell commented on the US economy’s performance and inflation target. Federal Reserve Bank of San Francisco President Mary Daly did not provide a timeline for rate cuts but acknowledged progress on inflation.
In terms of technical analysis, the USD/INR pair is holding a bullish trend as it remains above the key 100-day Exponential Moving Average (EMA). The 14-day Relative Strength Index (RSI) is also pointing upwards, suggesting further gains. The pair has been trading in a range since March, with resistance at 83.65 and support at 83.37. A break above resistance could lead to a move towards the all-time high of 83.75 and the psychological level of 84.00. Conversely, a drop below support may push the pair towards 83.00 and 82.82 levels.
Overall, the Indian Rupee is facing challenges due to the strengthening US Dollar and global factors affecting Asian currencies. However, domestic factors such as foreign fund inflows and falling crude oil prices are providing some support. Investors are closely watching US economic data and Fed speeches for further insights into market direction. The technical outlook for the USD/INR pair suggests a continuation of the bullish trend in the short term, with key resistance and support levels to watch for potential breakout opportunities.
