Indian Rupee Weakens Despite USD Consolidation in Asian Session
The Indian Rupee (INR) is facing downward pressure on Tuesday, influenced by the weakness of its Asian peers, higher crude oil prices, softer Indian inflation data, and a cautious market sentiment ahead of key US economic data. Despite the consolidative trading of the US Dollar (USD), the combination of these factors is weighing on the INR. However, potential intervention by the Reserve Bank of India (RBI) to stabilize the local currency could limit further depreciation.
Investors are closely watching the upcoming US Producer Price Index (PPI) for July for fresh market direction. Additionally, the US Consumer Price Index (CPI) data on Wednesday and India’s Wholesale Price Index (WPI) inflation figures will provide further insights into market trends.
Key Market Updates on Indian Rupee
- Indian CPI inflation dropped to 3.54% YoY in July, the lowest since August 2019.
- Indian Industrial Production rose by 4.2% in June, below expectations of 5.5%.
- Market expects steady rates by RBI for the next three months, followed by easing over subsequent periods.
- CME FedWatch Tool shows a decreased probability of a 50 bps interest rate cut by the Fed in September.
- US Producer Price Index for July is forecasted to ease to 0.1% month-over-month.
Technical Analysis: USD/INR Outlook
Despite the weaker INR, the USD/INR pair maintains a positive outlook on the daily timeframe, supported by key technical levels. The 14-day RSI indicates an upside bias, with resistance levels at 84.00 and potential for further gains towards 84.50. On the downside, initial support is seen at 83.84 with further support at 83.52.
Analysis Breakdown
In summary, the Indian Rupee is facing downward pressure due to various factors such as weak Asian peers, higher oil prices, and softer inflation data. Investors are monitoring key economic data releases for market direction. The technical outlook for USD/INR remains positive, with potential for further upside movement. Understanding these market dynamics can help individuals make informed decisions regarding their finances and investments.