The Indian Rupee (INR) continued its upward momentum on Tuesday, building on its best performance in over two weeks. Positive developments surrounding US-India trade talks have provided a supportive backdrop for the local currency. US Treasury Secretary Scott Bessent highlighted on Monday that several top US trading partners, including India, had presented strong proposals to avert US tariffs, with India likely to sign one of the first deals. Additionally, foreign investors have increased their purchases of Indian stocks in the past week, reversing earlier selling pressure and further supporting the INR.
Despite these positive factors, renewed demand for the US Dollar (USD) could weigh on the Indian currency, especially in light of improving US-China relations and the associated impact on the broader USD market. Furthermore, geopolitical tensions between India and Pakistan, including a ceasefire violation along the Line of Control (LoC) and a recent terror attack in Jammu and Kashmir, add additional downside risk to the INR.
Market participants are also awaiting key US economic data, including the April Consumer Confidence and March JOLTS Job Openings reports, due later on Tuesday. Investors are particularly focused on the preliminary reading of US Gross Domestic Product (GDP) for Q1, which will be released on Wednesday, ahead of the US Nonfarm Payrolls (NFP) report later this week.
Technical Outlook for USD/INR
On the technical front, the USD/INR pair remains under pressure, with the exchange rate trading below the key 100-day Exponential Moving Average (EMA). The bearish trend is evident, with the 14-day Relative Strength Index (RSI) hovering near 37. A break below the lower limit of the descending trend channel at 84.80 could push the pair further down towards 84.22, the low from November 2024. A sustained move below this level could open the door for a further decline to 84.08, the low of November 6, 2024.
Conversely, a move above the 100-day EMA at 85.80 would signal a potential shift in momentum, with the next resistance seen at 86.35, the upper boundary of the trend channel.
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