The Indian Rupee (INR) experienced a modest uptick on Wednesday, buoyed by improved risk appetite following China’s recent stimulus measures and a weaker US Dollar (USD). However, the local currency faces potential headwinds from rising crude oil prices, outflows linked to adjustments in the FTSE equity indexes, and renewed demand for USD from major Indian importers, which may exert downward pressure on the INR.
Market participants are awaiting the release of US New Home Sales data for August, as well as a speech by Federal Reserve Governor Adriana Kugler. Any dovish comments from Fed officials could negatively impact the USD against the INR. Notably, the upcoming release of the US August Personal Consumption Expenditures (PCE) Price Index data on Friday is also highly anticipated.
On the technical front, the INR is trading with a stronger tone. The negative outlook for the USD/INR pair remains intact, with the price struggling to surpass the critical 100-day Exponential Moving Average (EMA) on the daily chart. The 14-day Relative Strength Index (RSI) reinforces this downward momentum, currently situated below the midline at approximately 36.00.
The initial downside target for the USD/INR pair is set at 83.44, the low recorded on September 23. A break below this level could lead to a decline toward the significant support level at 83.00, which is also a psychological threshold and coincides with the low from May 24.
Conversely, sustained trading above the 100-day EMA at 83.62 may pave the way for a potential rise to the resistance-turned-support level at 83.75. The key barrier for the USD/INR pair is positioned at the round figure of 84.00.
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