The Indian rupee (INR) weakened slightly on Wednesday after hitting a two-week high in the previous session. Month-end demand for U.S. dollars (USD) from local corporates and foreign banks, likely acting on behalf of custodial clients, put pressure on the rupee. Additionally, market expectations that the Reserve Bank of India (RBI) may soon cut interest rates weighed on the INR’s appeal.
Crude Oil Price Decline Supports the Rupee
Despite the slight fall, a decline in crude oil prices offers some support to the rupee. As the world’s third-largest oil consumer, India benefits when crude prices drop, which tends to ease pressure on its current account and helps strengthen the INR exchange rate.
Key Economic Data in Focus
Traders are also awaiting several important U.S. economic reports that could influence USD/INR movements. These include the Conference Board’s consumer confidence report, durable goods orders, and the Dallas Fed manufacturing index. Later in the day, the minutes from the Federal Open Market Committee (FOMC) meeting will be closely watched for insights into U.S. monetary policy.
USD/INR Technical Outlook: Downtrend Persists
The USD/INR pair continues to trade in a downtrend on the daily chart. It remains below the key 100-day exponential moving average (EMA), signaling bearish momentum. The 14-day relative strength index (RSI) is also below the midline near 45.00, reinforcing the likelihood of further declines in the near term.
Support Levels:
Immediate support is at 84.78 (May 26 low).
A drop below this could push the pair toward 84.61 (May 12 low).
A further downside target is 84.05, the lower boundary of the current trend channel.
Resistance Levels:
On the upside, the 100-day EMA at 85.55 serves as key resistance.
A sustained move above this could see USD/INR rise to 85.75, the upper boundary of the trend channel.
Additional resistance lies at 85.10, the high from May 22.
Overall, the technical indicators suggest the rupee may continue to strengthen in the near term unless it faces renewed dollar demand or changes in rate cut expectations.
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