The Indian Rupee (INR) remained stable during Thursday’s Asian trading session, supported by a rally in the Chinese Yuan and increased sales of the US Dollar (USD) by local importers. This combination is anticipated to bolster the INR as investors prepare to analyze crucial data from the United States, including the final GDP figures for the second quarter and insights from Federal Reserve officials.
Despite its steady performance, the INR faces potential headwinds from rising crude oil prices and broader market risk aversion, which could limit the currency’s gains. Investors are closely watching for hints from the Federal Reserve’s officials, as remarks from Chair Jerome Powell and others may indicate the likelihood of further monetary policy adjustments. A speculated rate reduction in November could weaken the USD, benefitting the INR.
Recent forecasts from the Asian Development Bank suggest a robust trajectory for India’s economy, estimating growth rates of 7.0% for fiscal year 2025 and 7.2% for 2026. These projections align with prior assessments from April. Meanwhile, Moody’s Analytics has indicated that a slowing Indian economy may dampen overall growth in the Asia-Pacific region, with expected growth of 6.5% for India in 2025, down from an estimated 7.1% for 2024.
On the economic front, new data confirmed a 4.7% month-over-month decline in US New Home Sales for August, reflecting a fall to 716,000, slightly better than market expectations. Meanwhile, inflation indicators are drawing attention, with the headline Personal Consumption Expenditures (PCE) index anticipated to rise by 2.3% year-over-year in August, and core PCE likely increasing by 2.7%.
Currently, the USD/INR pair is trading below the critical 100-day Exponential Moving Average (EMA), with technical indicators suggesting a bearish trend. If bearish momentum prevails, the INR could test levels as low as 83.44, which would further attract sellers, potentially pushing the pair down to the psychological level of 83.00. Conversely, to shift momentum in favor of the USD, a significant breakout above the 100-day EMA at 83.62 would prompt a rally towards resistance levels around 83.75 and 84.00.
