USD/INR flat lines ahead of India PMI data

• The Indian rupee is trading flat in the Asian trading session on Wednesday.
• Possible RBI interventions and low crude oil prices could support the INR, while a firmer USD could limit its upside.
• Investors await Wednesday’s HSBC India Services PMI for further impetus.

The Indian Rupee (INR) remains flat on Wednesday. Traders remain alert for potential interventions by the Reserve Bank of India (RBI) to prevent the INR from breaching the 84 mark, although this is yet to be officially confirmed. Meanwhile, a drop in crude oil prices to their lowest level since January could support the local currency as India is the world’s third largest oil consumer and importer.

However, renewed demand for the US dollar (USD) from importers and risk aversion could weigh on the INR and boost the safe-haven currency such as the greenback. Looking ahead, the HSBC India Services Purchasing Managers Index (PMI) is due on Wednesday. On the US file, JOLTS Job Openings and the Fed Beige Book will be published. Attention will turn to US Non-Farm Payrolls (NFP) for August on Friday, which could provide some clues about the size and pace of interest rate cuts by the Federal Reserve (Fed) this year.

Daily Digest Market Movers: Indian rupee remains fragile amid several headwinds

• The World Bank has raised India’s growth forecast to 7% for the current financial year (FY25), up from its previous projection of 6.6%.
• RBI Deputy Governor Michael Patra said India will need a decade of rapid economic growth to achieve Prime Minister Narendra Modi’s goal of becoming a developed country by 2047.
• The HSBC India Services PMI is expected to improve to 60.4 in August from 60.3 in July.
• Business activity in the US manufacturing sector continued to contract, albeit at a weaker pace in August. US ISM manufacturing PMI rose to 47.2 in August from 46.8 previously, weaker than expected.
• Financial markets are pricing in about 61% odds of a 25 basis point (bps) rate cut by the Fed in September, while the possibility of a 50 basis point cut is 39%, according to CME’s FedWatch tool.

Technical Analysis: USD/INR is in consolidation mode, a bullish long-term outlook remains in play

The Indian Rupee is trading weaker today. The USD/INR pair remains consolidatively traded in the short term. However, in the longer term, the positive view of the pair prevails as the price is well supported above the key 100-day exponential moving average (EMA) on the daily time frame with the 14-day relative strength index (RSI). in bullish territory near 58.0.

The psychological figure of 84.00 seems to be a tough nut to crack for USD/INR. A decisive break above this level could open the way to 84.50.

In the bearish event, the initial level of support appears at 83.84, the lowest level since August 30. A breach of the said level could lead to some downside, possibly pulling the pair lower to the 100-day EMA at 83.62.