USD/INR flat line as traders await Fed’s Bowman speech

• The Indian rupee is holding steady in the Asian session on Tuesday.
• Strong foreign inflows and low crude oil prices could support the INR.
• Traders will monitor September US Consumer Confidence and the Fed’s Bowman speech on Tuesday.

The Indian Rupee (INR) consolidated its gains on Tuesday after hitting its highest level since mid-July in the previous session. The local currency could be supported by the recent Federal Reserve (Fed) interest rate cut and strong portfolio flows in Indian markets. Further, lower crude oil prices could support the INR as India is the third largest oil consumer after the United States (US) and China.

However, US dollar (USD) demand from local oil companies could help limit the pair’s losses. Investors are looking to US consumer confidence for September for another boost. Fed Governor Michelle Bowman is also scheduled to speak later on Tuesday.

Daily Digest Market moves: Indian rupee trades flat despite Fed dovishness

• The HSBC India Manufacturing Purchasing Managers’ Index (PMI) eased to 56.7 in September from the previous reading of 57.5. The services PMI fell to 58.9 from 60.9 previously.
• “India’s fast composite PMI grew at a slightly slower pace in September, marking the slowest growth seen in 2024,” noted Pranjul Bhandari, HSBC’s chief economist for India.
• Chicago Fed President Austan Goolsbee noted, “A lot more rate cuts are probably needed over the next year, rates have to come down significantly.”
• Atlanta Fed President Raphael Bostic said cutting the cycle with a big move would help push interest rates closer to neutral levels as the risks between inflation and employment become more balanced.
• Minneapolis Fed President Neel Kashkari said he expects to cut interest rates by quarter-point moves at each of the central bank’s two remaining meetings this year, according to Bloomberg.
• The US flash manufacturing PMI reading fell to a 15-month low of 47.0 in September from 47.9 in August, weaker than estimates of 48.5. Meanwhile, the services PMI fell to 55.4 in August from 55.7 previously, above the market consensus of 55.2.

Technical Analysis: Bearish trend of USD/INR prevails in the long term

The Indian Rupee trades fixed on the day. The USD/INR pair is maintaining bearish vibration in the daily time frame as it is holding below the key 100-day exponential moving average (EMA). The path of least resistance is to the downside as the 14-day Relative Strength Index (RSI) is in bearish territory near 33.70.

The initial support level for the pair is located at 83.30, the lowest since June 19. The additional downside filter to watch is the 83.00 round mark.

On the other hand, the first upside barrier for USD/INR appears near the 100-day EMA at 83.68. Any further buying above this level could see a rise to the key psychological resistance level of 84.00.