The Indian Rupee remains flat in Thursday’s Asian session. There are multiple factors at play. Importers’ demand for the US dollar, foreign bank activities, foreign fund outflows, and the muted trend in domestic equities are undermining the local currency. Additionally, the Federal Reserve’s rate cut decision on Wednesday, where it lowered the key interest rate by 25 basis points and projected a slower pace of cuts in 2025, has boosted the Greenback against the INR.
However, the downside for the INR might be limited as the Reserve Bank of India is likely to intervene to prevent excessive volatility. Traders are also keeping an eye on the US weekly Initial Jobless Claims, Existing Home Sales, and the final reading of Q3 GDP data set to be released later on Thursday.
Fed’s Rate Decision and Its Impact
On Wednesday, the Fed reduced the Federal Funds Rate to 4.25%-4.50%. While it expects to continue cutting rates next year, it now forecasts only two rate cuts instead of the four projected in September. The Summary of Economic Projections, or “dot plot”, also showed changes in expected unemployment and GDP growth figures.
USD/INR’s Trend Analysis
The USD/INR pair is trading flat on the day but maintains a strong uptrend on the daily chart, with the price staying above the key 100-day Exponential Moving Average. The 14-day Relative Strength Index being above the midline near 65.85 indicates bullish pressure.
The ascending trend channel and the psychological level of 85.00 pose a challenge for bulls. A breakout above this level could lead to a rally towards 85.50. On the downside, the initial support is at 84.82, the lower boundary of the trend channel. If this is breached, it could expose 84.22, and bearish candlesticks might see a drop to 84.16, the 100-day EMA.
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