USD/INR Rises Amid Global Risk-Off Sentiment and FPI Outflows by Amit Gupta, Kedia Advisory
The Indian Rupee weakened against the US Dollar during Monday's session, losing traction after last week’s significant gains. Renewed demand for the Greenback by importers and foreign portfolio investor (FPI) outflows weighed on the Rupee. Additionally, concerns about India’s economic slowdown and falling foreign reserves exacerbated the pressure on INR. However, RBI’s intervention and lower crude oil prices offered some relief. With the Federal Reserve’s interest rate decision due on Wednesday, traders anticipate further clarity on US monetary policy, which could influence the USD/INR pair. Technically, USD/INR remains in an uptrend, with key resistance at 86.69 and support at 86.14.
Key Highlights
* Indian Rupee declines after its strongest weekly gain in 17 months.
* Renewed Greenback demand and FPI outflows weigh on INR.
* India’s foreign exchange reserves fall to an 11-month low.
* RBI intervention and easing crude oil prices provide some relief.
* Federal Reserve interest rate decision to drive USD/INR sentiment.
The Indian Rupee (INR) struggled during Monday's session, extending losses after last week’s notable rally, its largest in 17 months. Renewed demand for the US Dollar (USD) by importers and foreign portfolio outflows from Indian markets weakened the local currency. Concerns about India’s economic slowdown and declining foreign reserves added to the Rupee’s bearish momentum.
India’s foreign exchange reserves dropped to $623.98 billion, an 11-month low, according to RBI data. While the Manufacturing PMI showed improvement at 58.0 in January, the Composite PMI slipped to 57.9, reflecting mixed macroeconomic indicators. However, lower crude oil prices and intervention by the Reserve Bank of India offered some relief to the Rupee.
On the global front, the US Federal Reserve’s interest rate decision on Wednesday has drawn attention. With no changes expected, market participants will closely watch the press conference for cues about future policy directions. Strong US economic data, such as higher Manufacturing PMI at 50.1 and a rise in existing home sales, further supported the Greenback.
From a technical perspective, the USD/INR pair maintains an upward trajectory. The pair is trading within a descending triangle pattern, well-supported above the 100-day EMA. Key resistance lies at the all-time high of 86.69, with a bullish breakout likely targeting 87.00. On the downside, immediate support is at 86.14, with further selling pressure leading to 85.85 and 85.65.
Finally
USD/INR remains bullish, supported above 100-day EMA. Resistance lies at 86.69, with potential to rally to 87.00, while support is at 86.14.
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