USD/INR maintains positive ground amid geopolitical risks

• The Indian rupee was lower in Asian trading hours on Tuesday.
• Exits from Indian stocks, higher oil prices and a stronger US dollar are undermining the INR.
• Traders await Fedspeak ahead of RBI rate decision.

The Indian Rupee (INR) weakened on Tuesday amid selling pressure from foreign funds and weak tone in domestic markets. Additionally, rising crude oil prices and escalating geopolitical tensions between Israel and Iran are contributing to the INR’s downside.

Traders will be keeping an eye on speeches by Raphael Bostic, Phillip Jefferson and Susan Collins from the US Federal Reserve on Tuesday. Any dovish comments from Fed officials could hurt the greenback and limit downside for the local currency. On Wednesday, the Reserve Bank of India’s (RBI) interest rate decision will take center stage.

Daily Digest Market Movers: Indian rupee looks fragile amid global challenges

• “We expect the rupee to trade on a negative trend on selling pressure from foreign funds and a weak tone in domestic markets. Rising tensions between Israel and Iran could put further pressure on the rupee,” said Anuj Choudhary, research analyst at Sharekhan at BNP Paribas. .
• India’s foreign reserves rose by $12.588 billion to a new all-time high of $704.885 billion for the week ended September 27, the Reserve Bank of India said on Friday.
• India’s Commerce Minister Piyush Goyal on Monday said it is time for the INR to appreciate amid inflows from debt and equity markets.
• The President of the Federal Reserve Bank of St. Louis Governor Alberto Musalem said Monday that he supports more interest rate cuts as the economy moves forward on a healthy path. However, he stressed that it is appropriate for the Fed to be cautious and not overdo monetary policy easing, according to Reuters.
• Minneapolis Fed President Neel Kashkari said Monday that the Fed welcomed September’s strong jobs report that pointed to a firm economy. Kashkari added that the balance of risks has shifted from “high inflation to maybe higher unemployment.

Technical Analysis: USD/INR constructive outlook prevails

The Indian Rupee is trading weaker today. The positive picture of the USD/INR pair remains intact with the pair holding above the 100-day exponential moving average (EMA) on the daily time frame. Additional upside looks favorable as the 14-day Relative Strength Index (RSI) is above the median near 60.70.

The upper boundary of the rectangle and the psychological mark near 84.00 act as a key resistance level for USD/INR. Any continued buying above this level could attract some buyers to the all-time high of 84.15 followed by 84.50.

On the downside, the first downside target to watch is 83.80, the October 1 low. Sustained bearish momentum could pave the way to the 100-day EMA at 83.66. The next level of contention is seen at 83.00, representing the round mark and the May 24 low.