The Indian Rupee (INR) showed little movement on Wednesday, maintaining a flat trajectory. The persistent demand for the US Dollar (USD) from foreign portfolio investors and local oil companies continues to pressure the INR. Additionally, the looming threat of tariffs imposed by US President Donald Trump on China adds to the bearish sentiment, potentially influencing the Rupee along with other Asian currencies.
However, the downside risk for the INR may be limited, as the Reserve Bank of India (RBI) could intervene in the foreign exchange market by selling USD to mitigate significant depreciation of the local currency. Additionally, a decline in global crude oil prices could offer some relief, given India’s position as the third-largest oil consumer in the world.
Investors are awaiting key economic data, including the preliminary reading of HSBC India’s Purchasing Managers Index (PMI) and the US S&P PMI data for January, both of which are set to be released later on Friday. These figures could offer further insights into the economic outlook and influence market sentiment.
Bullish Momentum for INR, But Key Resistance Remains
The Indian Rupee’s outlook remains neutral-to-bullish, as the USD/INR pair has been consistently forming higher highs and higher lows. The pair is holding above the important 100-day Exponential Moving Average (EMA), and the 14-day Relative Strength Index (RSI) is positioned above the 50 level, near 67.00, signaling continued bullish momentum in the near term.
The key resistance level for the pair is the all-time high of 86.69, which may be challenging for the bulls to break. A sustained move above this level could open the path toward the psychological 87.00 mark.
Potential Downside Risks
On the flip side, if the INR weakens below the January 20 low of 86.18, the next support level to watch is at 85.85, marking the low of January 10. Should the downward pressure persist, the 85.65 level, the low from January 7, could act as the next key target for the pair.
As the global economic landscape continues to shift, market participants are closely monitoring these technical levels, as well as upcoming data releases, for indications on the future direction of the Indian Rupee.
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