The Indian Rupee (INR) has shown strength despite renewed demand for the US dollar (USD) on Friday. The currency is expected to have a choppy session due to upbeat US inflation data, with investors considering the possibility of the Federal Reserve (Fed) delaying its first interest rate cut in the March meeting.
India’s Prime Minister Narendra Modi expressed optimism about India becoming one of the top three global economies, while Reserve Bank of India (RBI) Governor Shaktikanta Das emphasized the well-placed Indian banking system to support the country’s growth story.
Investors will closely monitor the US Producer Price Index (PPI) for December and a speech by Fed’s Neel Kashkari. On the Indian economic front, the release of December Consumer Price Index (CPI), Industrial Production, and Manufacturing Output figures will be key indicators.
From a technical perspective, the USD/INR pair maintains a bearish tone, trading within a familiar range of 82.80-83.40 since September 2023. The currency pair is currently holding below the key 100-period Exponential Moving Average (EMA), with the 14-day Relative Strength Index (RSI) below the 50.0 midpoint, suggesting potential further decline.
A decisive break below the psychological level at 83.00 could pave the way to critical support at 82.80. The next support level is near the low of August 11 at 82.60. On the upside, the upper boundary at 83.40 presents a tough resistance, with a breakout potentially targeting the 2023 high at 83.47 and the psychological level at 84.00.
Traders and investors will closely watch these technical levels and economic indicators for insights into the near-term direction of the USD/INR pair.