The Indian Rupee (INR) exhibits strength on Thursday, buoyed by robust foreign inflows. India’s Prime Minister, Narendra Modi, asserted on Wednesday that the country is poised to become one of the top three global economies. Modi credited a decade of structural reforms for enhancing India’s capacity and competitiveness, even in the face of global economic challenges.
Focus on US Inflation and Upcoming Indian Economic Data:
The highlight of the day will be the US inflation report, measured by the Consumer Price Index (CPI). Stronger-than-expected inflation data could potentially boost the US Dollar and impact the timing of a rate cut by the Federal Reserve (Fed). Attention will shift to India on Friday, with a keen focus on the December Consumer Price Index (CPI), Industrial Production, and Manufacturing Output.
Technical Analysis Points to Near-Term Downward Movement:
Despite the positive sentiment, technical analysis indicates a potential downleg for the Indian Rupee in the near term. The USD/INR pair is entrenched within a multi-month trading range between 82.80 and 83.40. The daily chart signals a resumption of a bearish outlook in the shorter timeframe, with the pair consistently below the key 100-period Exponential Moving Average (EMA). The 14-day Relative Strength Index (RSI) reinforces the downward momentum, standing below the 50.0 midpoint.
Key Levels for USD/INR:
A breach below the psychological level of 83.00 could lead to a drop to the critical contention level at 82.80, representing the lower limit of the trading range and the low of September 12.
Further downside targets include the low of August 11 at 82.60.
Immediate resistance for USD/INR is expected near the upper boundary of the trading range at 83.40.
A break above 83.40 may expose a 2023 high of 83.47, followed by the psychological figure at 84.00.
As the INR navigates these dynamics, market participants closely monitor economic indicators and technical signals for potential impacts on currency movements.