The Indian Rupee faced a weakening trend in the Asian session on Friday as demand for the US Dollar and recovery of crude oil prices put pressure on the currency. Additionally, India’s strong macroeconomic growth and sustained foreign inflows might provide some support to the INR. On the other hand, the possibility of a Fed rate cut in September following softer US inflation data could limit the upside for the USD/INR pair. Investors are eagerly waiting for the release of India’s Consumer Price Index (CPI) data and US Producer Price Index (PPI) for June on Friday.
The International Monetary Fund (IMF) highlighted that shifting employment into construction, services, and manufacturing sectors could boost India’s GDP growth by 0.2 to 0.5 percentage points. In the US, the Consumer Price Index (CPI) rose 3.0% on a yearly basis in June, below market expectations. Core CPI, which excludes volatile food and energy prices, increased by 3.3% YoY in June. The recent inflation reports led to expectations of a Fed rate cut in September, with two rate cuts predicted this year.
In terms of technical analysis, the USD/INR pair remains bullish above the 100-day Exponential Moving Average (EMA) on the daily chart. The Relative Strength Index (RSI) is in bullish territory, suggesting that the EMA support is likely to hold. However, the pair has been trading within a range since March 21. Any breakout above the upper boundary could lead to further gains, while sustained trading below the 100-day EMA might push the pair lower.
The US Dollar saw mixed performance against major currencies this week, with the highest strength observed against the New Zealand Dollar. The percentage changes of the USD against other major currencies are shown in the table. The heat map provides a visual representation of the percentage changes of major currencies against each other, indicating the relative strength or weakness of each currency.
Overall, the Indian Rupee faces challenges from the demand for the US Dollar and recovery of crude oil prices. However, India’s strong macroeconomic growth and sustained foreign inflows could provide some support. Investors are closely watching the release of key economic data like India’s CPI and US PPI to gauge the direction of the currency markets. Technical analysis suggests a bullish bias for the USD/INR pair in the near term, with potential upside targets and downside levels to watch out for.
