In early Asian trading on Tuesday, the Indian Rupee (INR) is showing signs of recovery against the US Dollar (USD). However, concerns remain as India’s foreign outflows and the unwinding trade in major Asian currencies could continue to weigh on the INR. All eyes are now on the Reserve Bank of India’s (RBI) interest rate decision scheduled for Thursday.
Market sentiment is expected to play a crucial role in determining the direction of the INR, as fears of a US recession and potential foreign outflows continue to loom over emerging markets. The recent rally in the Chinese Yuan and Japanese Yen could also pose challenges for the Indian Rupee.
Despite these uncertainties, expectations of aggressive rate cuts by the Federal Reserve could put pressure on the USD and support the INR. Traders are closely watching the Fed’s upcoming decisions, with a high probability of rate cuts in the coming months.
Daily Digest Market Movers: Indian Rupee rebounds, potential upside seems limited
- Indian HSBC Services PMI declined in July, falling short of expectations.
- The US ISM Service Purchasing Managers Index (PMI) showed improvement in July.
- The US S&P Global Composite PMI was below estimates for July.
- Comments from Chicago Fed President and San Francisco Fed President indicate a cautious approach by the US central bank.
- Market expectations for Fed rate cuts have risen significantly in recent days.
Technical analysis: USD/INR’s constructive bias remains in place
The USD/INR pair continues to maintain a bullish outlook, supported by key technical indicators. However, overbought conditions suggest a possible consolidation phase before further upside. Resistance levels are seen at 84.00 and 84.50, while support levels are at 83.78 and 83.51.
Overall, the INR’s performance will be closely tied to global market sentiment, Fed decisions, and domestic factors such as RBI policies and economic indicators. Traders and investors should stay vigilant and monitor developments to make informed decisions.