On Tuesday, the Indian Rupee (INR) faced pressure against the US Dollar (USD) as the Greenback strengthened amidst concerns over US oil supply disruptions from tropical storm Beryl. The INR lost ground despite growing expectations of a September rate cut by the US Federal Reserve (Fed), following subdued US employment data signaling a cooling labor market.
Market sentiment hinges on Fed Chairman Jerome Powell’s upcoming semi-annual monetary policy testimony to US lawmakers, which could provide clarity on the likelihood of a rate cut. An analyst from ING Bank noted that Powell’s comments could influence USD movements, potentially capping its gains.
In other market movements, India’s fiscal deficit target for FY25 is projected at 5.1% of GDP, according to Goldman Sachs, while the Reserve Bank of India (RBI) reported robust employment growth at 6% this fiscal year. The rupee encountered resistance levels around 83.44 and 83.48 against the USD, influenced by bids from state-run banks.
Traders are increasingly pricing in a Fed rate cut for September, with odds rising to nearly 76% according to the CME FedWatch tool. Meanwhile, US inflation data is anticipated to show a slight moderation in June.
Technically, the USD/INR pair remains bullish above the 100-day Exponential Moving Average (EMA) on daily charts, though it has entered a consolidation phase since March. The pair faces resistance at 83.65 and potential further gains towards 83.75 and 84.00. Conversely, support levels stand at 83.35 and could extend down to 83.00 and 82.82 upon a decisive break below.
The Indian Rupee continues to navigate global economic currents and domestic policy expectations, reflecting its sensitivity to global market dynamics.
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