USD/INR remains steady as improved risk sentiment supports the pair, with attention now shifting to the upcoming US CPI release

The USD/INR pair remains range-bound near the 84.00 level on Wednesday, with traders speculating that the Reserve Bank of India (RBI) may intervene in the open FX market to support the Indian Rupee (INR) and prevent it from weakening further.

The INR finds support against the US Dollar (USD) amid falling crude oil prices, which could ease downward pressure on the currency. As India is the world's third-largest oil consumer and importer, lower oil prices help reduce import costs. Brent crude futures have dropped to $64.75 per barrel, their lowest since December 2021, driven by concerns over weakening global demand.

Meanwhile, the US Dollar faces headwinds as US Treasury yields continue to decline ahead of the Consumer Price Index (CPI) data set to be released later in the North American session. This report may provide new insights into the potential scale of the Federal Reserve's (Fed) interest rate cut in September.

Daily Digest Market Movers: Indian Rupee Consolidates Amid Rising Speculation of RBI Interventions

• According to the CME FedWatch Tool, markets are fully pricing in a 25 basis point (bps) rate cut by the Federal Reserve at its September meeting. However, the probability of a 50 bps cut has dropped to 31.0%, down from 38.0% the previous week.

• The first US presidential debate between former President Donald Trump and Democratic nominee Kamala Harris in Pennsylvania focused heavily on the economy and inflation. Trump stated, "We have a terrible economy. Inflation is possibly the worst in history. It has been disastrous for people."

• On Tuesday, Reuters reported that six Indian bankers revealed investors are urging the Indian government to increase the issuance of short-term and green bonds, and to resume floating-rate bond auctions. These suggestions were part of discussions on the government's borrowing strategy for the second half of the fiscal year.

• Chicago Fed President Austan Goolsbee commented on Friday that Fed officials are increasingly in line with the market’s view that a policy rate adjustment is imminent. FXStreet’s FedTracker rated Goolsbee’s remarks as dovish, assigning a score of 3.2 on a scale of 0 to 10.

• India's foreign exchange reserves surged to a record high of $683.99 billion as of August 30, up from $681.69 billion. This increase is largely due to significant foreign capital inflows, fueled by strong economic growth and the anticipated inclusion of Indian assets in JPMorgan's major emerging market debt index, which has bolstered foreign investment.

• Pranjul Bhandari, Chief India Economist at HSBC, noted, “India’s Composite PMI showed continued strong growth in August, driven by the service sector’s fastest expansion since March. This growth is primarily supported by increased domestic orders and accelerated business activity.”

Technical Analysis: USD/INR Hovers Below 84.00, Testing Upper Boundary of Symmetrical Triangle

The Indian Rupee is trading near the 84.00 mark on Wednesday. A review of the daily chart indicates that the USD/INR pair is consolidating within a symmetrical triangle pattern, signaling reduced volatility and a phase of consolidation. However, the 14-day Relative Strength Index (RSI) remains above 50, suggesting a bullish trend may persist.

On the downside, immediate support comes from the nine-day Exponential Moving Average (EMA) at 83.92, aligning with the lower boundary of the symmetrical triangle near 83.90. A break below this support level could indicate a bearish shift, potentially driving the pair lower toward the six-week low at 83.72.

On the resistance front, USD/INR is currently testing the upper boundary of the symmetrical triangle near 84.00. A breakout above this level could propel the pair towards the all-time high of 84.14, reached on August 5.

USD/INR: Daily Chart