The Indian Rupee (INR) has shown a slight recovery on Friday, thanks to the weakening US Dollar. However, concerns remain as foreign outflows from India and renewed USD demand continue to put pressure on the INR, which hit an all-time low on Thursday. The recent increase in capital gains tax on equity investments and derivative trades has led to foreign fund outflows from Indian equities, impacting the local currency. Despite this, the Reserve Bank of India (RBI) may intervene to stabilize the INR, supported by high foreign exchange reserves. The spotlight is on the US Personal Consumption Expenditures (PCE) Price Index data for June, with potential implications for the Fed’s interest rate decision in September.
Key Market Movements: Indian Rupee’s Limited Upside Potential
- Importers are actively buying USD to leverage lower crude oil prices, as reported by forex traders.
- US GDP growth exceeded expectations, showing a 2.8% increase from the previous reading of 1.4%.
- Initial Jobless Claims in the US for the week ending July 20 were lower than expected at 235K.
- US Durable Goods Orders saw a significant drop in June, with Core Durable Goods showing a positive trend.
- The market predicts a high probability of the Fed maintaining its benchmark interest rate at the upcoming meeting.
Technical Analysis: INR’s Long-Term Weakness
The USD/INR pair is showing mild gains, maintaining an uptrend supported by the 100-day EMA and RSI indicating bullish momentum. The immediate resistance level is at 83.85, with potential for further gains towards 84.00. On the downside, a break below 83.65 could push the pair lower to 83.51, with support at 83.42.
US Dollar Price Movement: Weekly Analysis
The US Dollar (USD) has shown varying performance against major currencies this week, with notable strength against the New Zealand Dollar. The heat map below illustrates the percentage changes for USD against other major currencies, providing insights into the current market trends.
Disclaimer: This analysis is for informational purposes only and should not be considered as financial advice. Investors should conduct their own research before making any investment decisions.