The Indian Rupee (INR) has extended its gains against the US Dollar (USD) on Friday, trading near two-month highs. This rise is supported by anticipated portfolio inflows and a strengthening of the Chinese Yuan, following the Federal Reserve’s unexpected 50 basis point rate cut during its September meeting. Additionally, large USD sales by foreign banks acting on behalf of custodial clients have further bolstered the INR.
However, rising crude oil prices may constrain the Rupee’s upward movement, as India is the third-largest oil consumer after the United States and China. The Philadelphia Fed President Patrick Harker is scheduled to speak later today, potentially influencing market sentiment.
According to the Reserve Bank of India (RBI), foreign exchange reserves have increased by USD 66 billion in 2024, reaching a total of USD 689.235 billion. Amit Pabari, managing director at CR Forex, noted that the Rupee’s recent rally reflects favorable domestic conditions and the global monetary policy shifts. He indicated that the 84 level will serve as significant resistance, while 83.50 will act as strong support.
Recent data from the US Department of Labor showed that weekly Initial Jobless Claims fell to 219,000 for the week ending September 14, below the consensus estimate of 230,000. Additionally, US Existing Home Sales decreased by 2.5% month-over-month in August, dropping to 3.86 million from 3.96 million in July. Conversely, the Philadelphia Fed Manufacturing Index unexpectedly improved to 1.7 in September, up from a previous reading of -7.
Technical Analysis: USD/INR Resumes Downward Trend
The INR is trading stronger today, with the USD/INR pair breaking below a rectangle pattern and the key 100-day Exponential Moving Average (EMA) on the daily chart. The downward momentum is supported by a 14-day Relative Strength Index (RSI) reading near 32.40, indicating continued selling pressure.
Initial support for the pair is at 83.50, the low from July 17. If bearish momentum persists, the next target could be 83.31, the low from June 18, with additional support at the psychological level of 83.00.
On the upside, the 100-day EMA at 83.64 represents immediate resistance for USD/INR, followed by the lower limit of the rectangle at 83.75. A significant barrier to watch is the 83.90-84.00 zone.
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