The Indian Rupee (INR) continued to face challenges in early Thursday trading, primarily due to a downturn in domestic equities, which are closely following negative global trends. Despite a generally weaker US Dollar (USD), the INR is edging closer to its historical lows, as sales in the local stock market exert downward pressure on the currency. However, the Reserve Bank of India (RBI) is expected to intervene, potentially selling USD to help stabilize the INR and prevent it from falling below the 84 level. Additionally, a drop in crude oil prices may mitigate some of the currency’s losses, as India remains a major oil importer.
Market focus will soon shift to the US Services Purchasing Managers Index (PMI), which analysts anticipate will decrease slightly to 51.1 for August from July’s 51.4. This data point is generally considered a crucial indicator of economic health, and it will be closely analyzed alongside Friday’s Nonfarm Payrolls (NFP) report. Investors are keen to assess these figures as they may influence decisions regarding interest rate adjustments by the Federal Reserve.
In India, the latest services PMI surged to 60.9 for August, reflecting robust performance in the services sector and exceeding market expectations. The INR’s vulnerability is heightened, particularly ahead of the upcoming US employment data, which analysts believe could affect market sentiment and expectations for interest rate changes in the coming months.
In terms of technical analysis, the outlook for the USD/INR pair remains generally positive despite the day’s softness in the Indian Rupee. It has been hovering within an ascending triangle pattern on the daily chart, with a significant resistance level identified around 84.00. If the pair maintains trading above this level, it could pave the way to reach 84.50. Conversely, initial support is observed near 83.90; any drop below this level may retrace towards the 100-day Exponential Moving Average situated at 83.63.
