The USD/INR rises as Indian rupee weakens waiting for Indian CPI data

• The USD/INR wins as Indian rupee does not yield to the data of the Indian CPI for May.
• The Indian retail CPI is expected to have grown at a slower pace.
• Washington will probably extend the 90 -day tariff period for some of its commercial partners.

The Indian rupee (INR) opens in a weak note in front of its main peers on Thursday, before the data of the Consumer price index (CPI) Indian for May, which will be published at 10:30 GMT. Investors will pay special attention to retail inflation data, as they will indicate whether the Bank of the India Reserve (RBI) will cut the rates of interest again at the August Monetary Policy meeting.

Economists expect Indian retail general inflation data to have grown at a modest rate of 3% compared to 3.16% in April. The estimated figure is the lowest level seen since April 2019. The signals of inflationary pressures in deceleration encourage RBI officials to support a greater expansion of monetary policy.

At the policy meeting last week, the RBI changed its position of “accommodation” to “neutral”, stating that there is little room for greater relief of politics after having anticipated cuts in interest rates. The Indian Central Bank cut its rest rate in 50 basic points (PB) at 5.5% and reduced the cash reserve rate (CRR) in 100 PB at 3%.

Foreign institutional investors (FIIS) have also shown caution before inflation data, which resulted in a small sale of Indian shares worth 446.31 million rupees on Wednesday.

Meanwhile, the World Bank cut the economic growth forecasts of India for fiscal year 26 in 40 PB at 6.3% on Tuesday. Even so, the institution expects the nation to be the fastest growth among the largest economies in the world. The Bank cited the weakest export activity amid global commercial barriers such as the key reason behind the downward revision in economic growth.

What moves the market today: Indian rupee weakens against the US dollar

• The Indian rupee slides to about 85.53 against the US dollar (USD) during the first hours of negotiation in Europe on Thursday. The USD/INR wins, despite the fact that the US dollar faces negative reactions due to uncertainty about US tariff policy (USA). The US dollar index (DXY), which tracks the value of the dollar against six main currencies, extends its low performance from Wednesday to about 98.30, the lowest level seen in more than seven weeks.
• Market experts struggle to evaluate the probable result of the new economic policies announced by US President Donald Trump, after his return to the White House due to his erratic statements about the tariff structure.
• On Wednesday, President Trump indicated, in responding to reporters at the Kennedy Center, which could extend the 90 -day tariff term, which is scheduled to expire on July 8.
• “Provided to extend commercial deadlines, but it will not be necessary,” Trump said. The US Treasury Secretary, Scott Besent, also told the Chamber Tax Writing Committee that the pause in tariffs could extend to 18 countries that are negotiating from “good faith,” according to CNBC.
• Donald Trump’s comments were produced after he affirmed that he will send commercial letters to the countries within 1-2 weeks saying: “This is the deal, you can accept or leave it.”
• In the economic field, investors expect the data of the US Production Price Index (IPP) for May, which will be published at 12:30 GMT. Producers inflation data is expected to show that business owners increased the prices of goods and services in their facilities. Before that, the consumer price index (CPI) report for May showed that price pressures grew at a moderate rate, indicating that the impact of Trump’s tariff policy has not yet begun to affect the economy, or that business owners released accumulated inventories before the reciprocal announcement of tariffs.
• Meanwhile, it is unlikely that the Federal Reserve (FED) open the possibility of reducing interest rates until officials obtain clarity about the possible consequences of Trump’s economic policies.

Technical Analysis: The USD/INR struggles to return above the 20 -day EMA

The USD/INR attracts offers near its weekly minimum of around 85.47 on Thursday. However, the short -term perspective of the torque is uncertain, since it struggles to maintain the exponential (EMA) mobile average of 20 days, which is negotiated around 85.48.

The 14-day relative force (RSI) index remains within the range of 40.00-60.00, indicating a lateral trend.

Looking down, the minimum of June 3, 85.30 is a key support level for the torque. A break down below this level could expose it to the minimum of May 26, 84.78. On the positive side, the Tar could visit a maximum of more than 11 weeks around 86.70 after breaking above the maximum of May 22, 86.10.