The Indian Rupee (INR) experienced a decline during Friday’s trading session in Asia, primarily due to heightened demand for the US Dollar (USD) from importers seeking to fulfill month-end obligations. The unwinding of long positions also contributed to this pressure on the INR. Although the rupee fell, the impact was somewhat mitigated by a decrease in crude oil prices and strong performance in Indian equity markets.
Market participants are eagerly anticipating the publication of the US Personal Consumption Expenditures (PCE) Price Index for August, which is a key measure of inflation favored by the Federal Reserve. Projections indicate that the headline PCE will show a year-over-year increase of 2.3%, while the core PCE is expected to rise by 2.7%. Additionally, the Michigan Consumer Sentiment Index for September will also be released later in the day, further shaping market sentiment.
The Indian equity market saw robust activity, with the Sensex gaining 666.25 points to reach a record closing level of 85,836.12, and the Nifty rising by 211.90 points to achieve a high of 26,216.05. This positive trend in the stock market could provide some support for the rupee in the face of USD demand.
In the United States, durable goods orders remained unchanged in August, contrasting sharply with a significant increase of 9.9% reported in July. This figure outperformed expectations of a 2.6% decline. Moreover, the US Gross Domestic Product (GDP) growth for the second quarter has been confirmed at an annual rate of 3.0%.
From a technical standpoint, the outlook for the USD/INR pair appears bearish, with the price remaining below the 100-day Exponential Moving Average (EMA). The Relative Strength Index (RSI) indicates downward momentum, suggesting that further declines are plausible. The low from September 23 serves as initial support, and sustained trading below this level may lead the pair to test the psychological mark of 83.00. Conversely, a break above the 100-day EMA may lead to a retest of resistance at 83.75 and potentially challenge the round figure of 84.00.
