untitled design

USD/INR weakens on Fed rate cut hopes and falling crude oil prices

  • The Indian Rupee gained ground in early European trading on Monday.
  • Fed rate cut hopes and lower crude oil prices support the INR.
  • Renewed demand for the US Dollar (USD) could limit gains for the Indian Rupee.

The Indian Rupee (INR) strengthens on Monday. The expectation that the US Federal Reserve (Fed) may cut interest rate in September has boosted the INR. Lower interest rates in the US could increase capital flows into higher-yielding emerging market assets, benefiting the Indian Rupee. Moreover, falling crude oil prices from a four-week high support the local currency and help ease the depreciation of the INR as India is the world’s third-largest importer and consumer of oil.

However, renewed demand for the US Dollar (USD) amid a cautious mood could undermine the INR. Looking ahead, investors await Fed Chair Jerome Powell’s testimony on Tuesday. The focus will be on the US Consumer Price Index (CPI) inflation data for June, due out on Thursday.

Daily Market Movers Roundup: Indian Rupee holds firm amid positive economic outlook in India

  • “Asian currencies took a pause due to broad-based US dollar weakness… the risk for Asian currencies, however, remains tilted to the downside, with the Fed remaining patient,” said Lloyd Chan, senior currency analyst at MUFG Bank.
  • Indian benchmark indices opened lower on Monday, with the BSE Sensex falling 161 points to 79,883.5 points, while the Nifty50 index dipped marginally by 0.06% to 24,310.
  • Foreign Portfolio Investors (FPIs) continued to show strong buying interest in Indian equities with net inflows of about $1 billion in the first week of July 2024, according to depositories data.
  • US Nonfarm Payrolls (NFP) beat expectations, adding 206,000 net new jobs in June, according to the US Bureau of Labor Statistics (BLS) on Friday. The previous month saw a sharp downward revision to 218,000 from the initial reading of 272,000.
  • Average hourly earnings in the U.S. declined to 3.9% annually in June, compared with the previous reading of 4.1%. The unemployment rate rose to 4.1% for the first time since December 2021.
  • Financial markets now price in a nearly 77% chance of a Fed rate cut in September, up from 70% before the U.S. jobs report, according to the CME FedWatch tool.

Technical Analysis: USD/INR continues to rangebound

The Indian Rupee is trading on a stronger note on the day. The uptrend in the USD/INR pair prevails in the long term as it is above the 100-day exponential moving average (EMA) on the daily time frame.

In the near term, the pair has been range-bound for a couple of months since March 21. Further consolidation looks favorable as the 14-day Relative Strength Index (RSI) remains hovering around the midline of 50, indicating neutral momentum.

The first upside target to watch for USD/INR is 83.60, a high from July 4. Further north, the next hurdle is seen at the record high of 83.75. A decisive break above this level will see a rally towards the psychological level of 84.00.

On the other hand, the potential support level lies at 83.35, the 100-day EMA. A break of this level will expose the round mark of 83.00, followed by 82.82, a low from January 12.

US Dollar Price Today

The table below shows the percentage change of the US Dollar (USD) against the major currencies listed today. The US Dollar was the weakest against the British Pound.

USD 0.01% -0.03% 0.01% 0.03% -0.01% -0.02% 0.00%
EUR -0.01% -0.04% -0.01% 0.01% -0.02% -0.02% 0.00%
GBP 0.02% 0.04% 0.04% 0.04% 0.01% 0.02% 0.03%
CAD 0.00% 0.01% -0.03% 0.01% -0.03% -0.01% -0.01%
AUD -0.03% 0.00% -0.04% -0.01% -0.03% -0.02% -0.01%
JPY 0.00% 0.02% -0.03% 0.01% 0.06% -0.02% 0.00%
NZD 0.02% 0.02% -0.02% 0.00% 0.03% 0.00% 0.02%
CHF 0.00% 0.00% -0.04% -0.01% 0.01% -0.01% -0.01%

The heatmap shows the percentage changes of the major currencies relative to each other. The base currency is chosen from the left column, while the quote currency is chosen from the top row. For example, if you choose the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change shown in the chart will represent EUR (base)/JPY (quote).

Source: Fx Street

You may also like

Get the latest

Stay Informed: Get the Latest Updates and Insights


Most popular