USD/INR Strengthens Amid Demand for US Dollar and Market Weakness by Amit Gupta, Kedia Advisory
The Indian Rupee (INR) faces continued pressure as the USD/INR pair rises, buoyed by strong demand for the US Dollar. The INR remains weak after bouncing off a record low, with a decline in domestic equity markets and persistent foreign capital outflows contributing to the bearish trend. While the Reserve Bank of India (RBI) may intervene to support the INR, traders are focused on key US data, including the ISM Services PMI and upcoming Federal Reserve meetings. Despite the bullish bias for USD/INR, overbought conditions could limit further upside momentum. Key support levels for the pair are seen at 85.60 and 85.00, with the upside target at 85.84.
Key Highlights
* USD/INR continues to rise due to increased demand for USD.
* Domestic equity market weakness and foreign outflows weigh on INR.
* RBI intervention could help contain further INR losses.
* Traders eye US ISM Services PMI and Fed minutes for direction.
* Overbought RSI conditions may limit further gains in USD/INR.
The Indian Rupee (INR) is under pressure on Tuesday as the USD/INR pair continues its bullish run, climbing on the back of a strong US Dollar. The pair has recently broken above its ascending trend channel and is holding above the key 100-day Exponential Moving Average (EMA) on the daily chart. This upward momentum comes despite a sharp fall in domestic equity markets and the persistent outflow of foreign capital. The 14-day Relative Strength Index (RSI) has surged beyond the 70.00 mark, signaling overbought conditions, which suggests that further consolidation could be in play before a potential continuation of the uptrend.
Investors are also keeping an eye on key US economic data, including the ISM Services Purchasing Managers Index (PMI) and the minutes from the Federal Reserve's December policy meeting. Analysts expect the ISM Services PMI to show improvement, potentially bolstering the USD further. However, statements from US Federal Reserve officials, including Fed Governor Lisa Cook, suggest that rate cuts could be more cautious in the near future due to labor market resilience.
For the USD/INR pair, the crucial resistance is at an all-time high of 85.84, with sustained trading above this level possibly paving the way to the psychological 86.00 mark. On the downside, the initial support level is at 85.60, followed by 85.00 and 84.45, the 100-day EMA.
Finally
Despite the bullish trend in USD/INR, overbought conditions could limit further gains. Traders should watch for key data releases and potential RBI intervention.
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