The Indian Rupee (INR) faced a downward trend on Tuesday as the US Dollar (USD) gained strength and fears of potential disruption in US oil supply loomed. This decline comes despite growing expectations of a rate cut by the US Federal Reserve (Fed) in September following a cooling US labor market. The upcoming testimony by Fed Chair Jerome Powell to US lawmakers will be crucial in determining the future course of action. Any dovish comments by Powell could weaken the Greenback and limit the upside for the USD/INR pair.
India’s fiscal deficit target for FY25 is estimated to be at 5.1% of GDP, according to Goldman Sachs. Additionally, the country’s employment growth rate has seen a significant increase this fiscal year, with the total additions to the workforce at the highest level since 1981-1982. Bids from state-run banks around the 83.44 mark have capped the Rupee’s gains, indicating a strong presence of buyers in the market. Traders are now pricing in a nearly 76% chance of a Fed rate cut in September, as per the CME FedWatch tool. The upcoming US CPI data is expected to show a slight decrease in both YoY and core inflation numbers for June.
Technically, the USD/INR pair is in a consolidation phase in the near term, with the 14-day RSI hovering around the midline. The pair remains above the key 100-day EMA on the daily chart, indicating a bullish sentiment. The potential resistance level for the pair is at 83.65, with further gains possibly leading to the 83.75 and 84.00 marks. On the downside, the initial support lies at 83.35, and a break below this level could push the pair towards 83.00 and 82.82.
The US Dollar saw mixed performance against major currencies this week, with the Canadian Dollar emerging as the strongest contender. The heat map displaying percentage changes of major currencies against each other provides a comprehensive overview of the week’s performance. The ongoing global factors influencing the Indian Rupee’s movement in the forex market highlight the currency’s sensitivity to external developments. Traders and investors will continue to closely monitor key events and data releases for further insights into the currency’s future trajectory.
