The Indian Rupee (INR) inched higher on Monday, building on its strongest performance in over two years from the previous session. According to Bloomberg, the last time the rupee saw such a sizable one-day gain was on November 11, 2022, when it surged by approximately 99 paise. Concerns over the US fiscal outlook and foreign banks offloading the US dollar have supported the local currency’s advance.
However, expectations of interest rate cuts by the Reserve Bank of India (RBI) and rising crude oil prices—which typically weigh on the INR given India’s status as the world’s third-largest oil consumer—pose downside risks. Market focus will sharpen on the Federal Open Market Committee (FOMC) minutes due Wednesday, ahead of the US Personal Consumption Expenditures (PCE) Price Index report.
The rupee’s recent strength was further bolstered by US President Donald Trump’s announcement over the weekend to delay the imposition of 50% tariffs on the European Union until July 9, easing trade tensions. Meanwhile, India recently overtook Japan as the world’s fourth-largest economy, according to IMF data.
Fed officials are signaling caution amid tariff uncertainties. Chicago Fed President Austan Goolsbee highlighted on Friday that Trump’s tariff threats have complicated monetary policy decisions, likely delaying rate changes. Kansas City Fed President Jeffrey Schmid emphasized reliance on hard data over softer indicators when deciding on interest rates. The market currently prices in two Fed rate cuts this year, with the next expected no earlier than September.
Technically, USD/INR maintains a bearish bias after failing to breach the 100-day Exponential Moving Average (EMA). The pair’s downside momentum is supported by the 14-day Relative Strength Index (RSI), which remains below the neutral 50 line at around 47.00.
Immediate support for USD/INR lies at the psychological 85.00 level. A decisive break below could trigger further declines toward 84.84, the May 12 low, and potentially 84.05, the lower boundary of the current downtrend channel.
On the upside, resistance is eyed at the 100-day EMA near 85.58. A sustained rebound above this could push prices toward 85.80, the channel’s upper limit, with the next key hurdle at 86.70, the April 9 high.
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