The Indian Rupee (INR) weakened on Tuesday after hitting a one-week high in the previous session. The US Dollar (USD) is poised to continue its upward trajectory, driven by strong demand from importers and a reversal of global financial flows toward the United States. However, the Reserve Bank of India (RBI) is expected to intervene in the foreign exchange markets to limit the INR’s depreciation, preventing a more significant fall. Additionally, a drop in crude oil prices offers some support for the INR, as India is the world’s third-largest consumer of oil.
Investors are eyeing key policy developments this week, which could provide fresh catalysts for the currency pair. On Friday, attention will turn to the preliminary HSBC India Purchasing Managers Index (PMI) for January, which will offer insights into the state of the economy. In the US, the flash estimate of the S&P PMI data will also be released, potentially impacting the USD/INR exchange rate.
On the technical front, the USD/INR pair remains bullish on the daily chart, having formed higher highs and higher lows while staying above the crucial 100-day Exponential Moving Average (EMA). The positive momentum is supported by the 14-day Relative Strength Index (RSI), which stands near 65.40, signaling further upside potential.
The key resistance level for USD/INR lies at the all-time high of 86.69. A sustained move above this level could propel the pair toward the psychological 87.00 mark. On the downside, the January 20 low of 86.18 serves as initial support. Further losses could see the pair test the January 10 low of 85.85, with additional support at 85.65, marking the low from January 7.
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