The Indian Rupee (INR) edged lower on Wednesday, pressured by persistent U.S. Dollar (USD) demand from foreign banks—likely on behalf of custodial clients—and a weaker Chinese Yuan. Additional downward pressure came from falling domestic equities and a surge in crude oil prices, further undermining the local currency.
Despite these headwinds, hopes for a new trade agreement between India and the United States may offer some support to the Rupee. According to Bloomberg, the two countries are negotiating a phased trade deal comprising three stages, with India aiming to finalize an interim agreement before July—when U.S. President Donald Trump’s reciprocal tariffs are set to take effect.
Market participants are also keeping a close eye on comments expected later Wednesday from Federal Reserve official Thomas I. Barkin. Meanwhile, on Thursday, attention will shift to India’s preliminary May reading of the Purchasing Managers Index (PMI), which could offer fresh insights into the country’s economic momentum.
Commenting on the day’s currency action, Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, noted, “The Indian Rupee opened slightly weaker and is expected to trade in a range of 85.25 to 85.75, with no major market triggers to alter its direction.”
Adding to the cautious tone, U.S. Federal Reserve officials offered mixed but broadly cautious remarks on the economic outlook. Atlanta Fed President Raphael Bostic warned that the full impact of the Trump administration’s new tariff policy would take time to assess, indicating support for only one interest rate cut this year. St. Louis Fed President Alberto Musalem suggested that current policy remains appropriate unless trade tensions significantly ease. Cleveland Fed President Beth Hammack highlighted the risk of stagflation—marked by weak growth and persistent inflation—creating further uncertainty in the outlook.
USD/INR Outlook: Bearish Under Key Technical Level
From a technical standpoint, the USD/INR pair remains under pressure, trading below its 100-day Exponential Moving Average (EMA), signaling a bearish bias. However, with the 14-day Relative Strength Index (RSI) hovering around the midpoint, the pair may see temporary consolidation or a mild rebound in the near term.
Key support lies at 85.34—the May 19 low—followed by the psychologically significant 85.00 level, and then 84.61, the low of May 12. On the upside, the first resistance is at the 100-day EMA near 85.60. A break above this threshold could open the door to further gains toward the 85.90–86.00 zone, which marks both a round number and the upper boundary of the current trend channel.
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