The Indian Rupee (INR) strengthened on Friday after hitting a one-week high in the previous session, supported by significant US Dollar (USD) sales from foreign banks. Optimism surrounding US President Donald Trump’s remarks about a potential fresh trade deal with China also provided a boost, lifting both the Chinese Yuan and the INR. This positive sentiment helped buffer the Rupee, though analysts expect any significant depreciation to be limited by potential intervention from the Reserve Bank of India (RBI).
However, the INR’s upside could face headwinds from continued Foreign Portfolio Investment (FPI) outflows and rising demand for the Greenback. Furthermore, the rebound in crude oil prices—India being the world’s third-largest oil importer—could put additional pressure on the Rupee, as higher oil prices typically lead to an increase in India’s import bill.
Traders are also looking ahead to India’s advanced HSBC Purchasing Managers Index (PMI) for February, which is set to be released later today. The data could give further insight into India’s economic outlook. Meanwhile, on the US economic front, reports such as the S&P Global PMI, Existing Home Sales, and the Michigan Consumer Sentiment Index will be released, while Federal Reserve officials Mary Daly and Philip Jefferson are scheduled to speak, possibly offering clues on future policy direction.
Technical Outlook: The USD/INR pair remains in a positive technical posture, holding above the key 100-day Exponential Moving Average (EMA), suggesting further potential upside. However, the Relative Strength Index (RSI) is below the midline at 48.0, indicating that the market might be in a consolidation phase or could see a slight pullback before any potential rise.
Immediate Resistance: 87.00 is the first psychological resistance level for USD/INR. A sustained move above this level, especially with bullish candlesticks, could open the door to testing the all-time high near 88.00, with further upside possible toward 88.50.
Support Levels: On the downside, if the pair fails to maintain support at 86.35 (the February 12 low), a potential move towards 86.14 (the January 27 low) could be in play. The next key support level lies at 85.65, the low from January 7.
The INR’s short-term outlook remains influenced by a mix of domestic economic data, external factors like crude oil prices, and global market sentiment, making it crucial to monitor key resistance and support levels in the USD/INR pair.
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