The Indian Rupee (INR) weakened on Thursday despite the release of robust economic data. The latest HSBC India Manufacturing Purchasing Managers Index (PMI) for May edged up slightly to 58.3 from 58.2 in April, surpassing expectations of 58.0. Meanwhile, the Indian Services PMI showed a notable improvement, rising to 61.2 in April from 58.7 in March. However, the local currency softened immediately following the upbeat PMI figures.
Market participants are now focused on the preliminary HSBC PMI reading for May, scheduled for release later Thursday. Meanwhile, US economic indicators expected today include the advanced S&P PMI for May, the Chicago Fed National Activity Index, weekly Initial Jobless Claims, and Existing Home Sales reports.
The Rupee’s decline coincides with renewed demand for the US Dollar. India’s Commerce and Industry Minister Piyush Goyal announced optimism over finalizing the first phase of an India-US trade deal before July. Despite this, the Reserve Bank of India’s (RBI) May bulletin highlighted a fragile global growth outlook, citing policy uncertainty and weak consumer sentiment, even as the US paused tariffs. Moody’s Ratings affirmed India’s resilience to global trade disruptions, crediting strong domestic growth drivers and low export dependence.
In the US, political developments remain unsettled, with House Speaker Mike Johnson revealing that former President Trump failed to rally sufficient Republican support for his comprehensive tax reform bill. Concurrently, Federal Reserve officials have signaled a likely pause on interest rate cuts throughout the summer, a stance echoed by market expectations showing a 71% probability of steady rates in the upcoming Fed meetings, per CME FedWatch data.
Technically, the USD/INR pair maintained bearish pressure on Thursday, trading below the critical 100-day Exponential Moving Average (EMA). The 14-day Relative Strength Index (RSI) hovered near the midpoint, reflecting neutral near-term momentum that leaves room for consolidation or a temporary rebound. Key support lies at 85.34—the May 19 low—with further declines potentially targeting the psychological 85.00 level and the May 12 low of 84.61. Conversely, a sustained move above the 100-day EMA at 85.60 could propel the pair towards 85.85, the upper trend channel boundary.
Investors will continue to monitor these economic indicators and geopolitical developments closely, as they shape the trajectory of the Indian Rupee against the US Dollar in the near term.
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