- The Indian Rupee hovers near a record low in early Wednesday's European session.
- A stronger USD and ongoing foreign fund outflows keep the INR under pressure.
- Focus now turns to the Fed's rate decision on Thursday.
The Indian Rupee (INR) faces selling pressure near an all-time low on Wednesday, impacted by a stronger U.S. Dollar (USD) and weakness across Asian currencies, as polls indicate Republican candidate Donald Trump is leading Democratic candidate Kamala Harris in the U.S. presidential race. Persistent outflows from domestic equities further weigh on the INR.
However, downside risks could be limited by the Reserve Bank of India's (RBI) interventions to prevent sharp depreciation by selling USD. Investors are closely watching the U.S. election results ahead of Thursday’s Federal Reserve (Fed) meeting, as Trump's improved odds fuel USD gains.
Daily Market Movers Digest: Indian Rupee Faces Pressure Amid US Election Developments
- “The Dollar is performing well, U.S. yields are rising, and U.S. equity futures are up, as traders lean into Trump trades based on current election results," noted a hedge fund manager in Singapore.
- The IMF projects India will surpass Japan as the world’s fourth-largest economy by FY2025, with GDP expected to reach $4,340 billion next fiscal year.
- U.S. economic indicators show the ISM Services PMI rose to 56.0 in October, while the S&P Global Services PMI registered at 55.0, signaling robust performance.
- Financial markets see a 94% chance of a Fed rate cut in December, according to the CME FedWatch tool.
Technical Analysis: USD/INR shows a strong bullish outlook for the long term
The Indian Rupee weakens on the day. Technically, the strong bullish outlook of the USD/INR pair remains intact as the pair holds above the key 100-day Exponential Moving Average (EMA) on the daily timeframe. Additionally, the 14-day Relative Strength Index (RSI) holds above the midline near 67.30, suggesting that the path of least resistance is to the upside.
The key upside barrier for USD/INR emerges near the upper boundary of the ascending trend channel at84.25. Extended gains above the mentioned level could see a rally to 84.50, en route to the 85.00 psychological level.
In the bearish event, any follow-through selling below the lower limit of the trend channel near 84.05 could expose 83.79, the 100-day EMA. The next contention level is located at 83.46, the low of September 24.
