The Indian Rupee (INR) traded sideways in Monday’s Asian session, despite the recovery of the US Dollar (USD). The potential for rate cuts by the Federal Reserve (Fed), lower US bond yields, and continued foreign inflows into India may support the local currency. However, the INR’s gains could be limited by rising crude oil prices and increased demand for the USD from state-run banks and local importers.
Traders are eagerly awaiting India’s Wholesale Price Index (WPI) Inflation data, set to be released on Monday, for fresh impetus. The data is expected to show a rise to 3.50% year-on-year in June from 2.61% in May. Additionally, India’s Trade Balance will also be released, providing further insight into the country’s economic performance.
On the US front, the NY Empire State Manufacturing Index for July will be published, and Fed’s Mary Daly is scheduled to speak. The market is currently pricing in a high probability of a 25 basis points rate cut by the Fed in September, according to the CME Fedwatch Tool.
In terms of technical analysis, the USD/INR pair remains in a consolidative mode in the near term. While the pair is holding above the key 100-day Exponential Moving Average (EMA) on the daily chart, it has been trading within a range since March 21. The 14-day Relative Strength Index (RSI) suggests further consolidation, with a break above 83.65 potentially leading to new highs for the pair.
Overall, the Indian Rupee’s performance will continue to be influenced by a combination of domestic and international factors, with traders closely monitoring economic data releases and central bank actions for guidance on the currency’s direction.
