- The Indian Rupee gains momentum in Friday’s Asian trading session.
- A weaker USD and portfolio inflows bolster the INR, though rising crude oil prices could limit its gains.
- Investors are anticipating the Fed’s Harker speech later on Friday.
The Indian Rupee (INR) continues to strengthen against the weaker US Dollar (USD) on Friday, trading near two-month highs. This rally is supported by anticipated portfolio inflows and the appreciation of the Chinese Yuan, following the US Federal Reserve's (Fed) unexpected 50 basis point rate cut at its September meeting, signaling the start of its easing cycle. Additionally, USD sales, likely from large foreign banks on behalf of custodial clients, further contribute to the INR’s gains.
However, rising crude oil prices could limit the Rupee's upside, as India is the third-largest oil consumer after the United States and China. Investors are also awaiting remarks from Federal Reserve Bank of Philadelphia President Patrick Harker, scheduled for later on Friday.
Daily Digest Market Movers: Indian Rupee Strengthens Amid Favorable Economic Conditions
- The Indian Rupee is trading stronger, supported by positive economic factors. According to the Reserve Bank of India (RBI), the country's foreign exchange reserves have increased by USD 66 billion in 2024, reaching a total of USD 689.235 billion.
- “The Rupee's recent rally reflects favorable domestic conditions and the impact of global monetary policy shifts. With the Fed's decisions influencing markets, attention now turns to the Reserve Bank of India's response and whether the Rupee can sustain its upward momentum. For now, 84 will serve as a key resistance level, while 83.50 offers strong support,” said Amit Pabari, Managing Director at CR Forex.
- In the US, weekly Initial Jobless Claims for the week ending September 14 came in at 219K, according to the Department of Labor (DoL), below the market consensus of 230K and down from the revised 231K in the previous week.
- US Existing Home Sales fell by 2.5% month-on-month in August to 3.86 million, compared to 3.96 million in July.
- The Philadelphia Fed Manufacturing Index unexpectedly rose to 1.7 in September, beating estimates of -1 and rebounding from the previous reading of -7.
Technical Analysis: USD/INR Resumes Broader Bearish Trend
The Indian Rupee strengthens further, resuming the broader downtrend in the USD/INR pair. The pair has broken below a rectangle pattern and the key 100-day Exponential Moving Average (EMA) on the daily chart, signaling continued downward pressure. This momentum is reinforced by the 14-day Relative Strength Index (RSI), which hovers below the midline at 32.40, favoring the sellers.
The initial support level is at 83.50, the low from July 17. If the bearish momentum continues, it could open the door to 83.31, the low from June 18, with the next psychological support at 83.00.
On the upside, the immediate resistance is at the 100-day EMA, currently at 83.64, followed by 83.75, the lower boundary of the rectangle pattern. The key resistance zone to monitor is between 83.90 and 84.00.
