USD/INR: Resistance at 83.60, Support at 83.35

Key Points:

• USD/INR remains bullish, with key resistance at 83.60 and support at 83.35.
• Potential forex interventions by the RBI may support the INR’s strength.
• A strong sales report could boost the USD, affecting INR gains.

On Tuesday, the Indian Rupee (INR) gained ground against the US Dollar (USD), capitalising on the latter’s weaker performance. This shift in momentum is primarily attributed to a combination of global and domestic factors. The US Federal Reserve’s cautious stance, the rebound in crude oil prices, and the potential foreign exchange intervention by the Reserve Bank of India (RBI) are key influences. 

Fed’s Dovish Stance and Oil Prices Influence INR

The US Federal Reserve’s recent cautious approach has led to a softer USD. This dovish stance hints at a possible slowdown in interest rate hikes, affecting the USD’s global strength. Concurrently, the rebound in crude oil prices poses a potential challenge for the INR. India heavily depends on oil imports, which could lead to higher import costs and negatively impact the currency. Additionally, the RBI’s potential foreign exchange interventions might support the INR, ensuring that any upside movement in the currency remains capped.

US Retail Sales Expected to Rise 0.2% in May.

The release of US Retail Sales data, scheduled for Tuesday, is expected to show a 0.2% month-on-month increase for May. This data is a critical indicator of consumer spending, a major driver of the US economy. A strong retail sales report could bolster the USD, potentially reversing some of the INR’s gains. Market participants will closely monitor the data’s impact on the USD/INR exchange rate.

Federal Reserve Insights to Affect USD/INR Pair

Tuesday also features speeches from several Federal Reserve officials, including Lisa Cook, Thomas Barkin, Adriana Kugler, Lorie Logan, Alberto Musalem, and Austan Goolsbee. These speeches are crucial as they may provide insights into the Fed’s future policy direction. Any hawkish signals could strengthen the USD, influencing the USD/INR pair’s dynamics.

Bullish USD/INR Outlook Despite Daily Weakness

Despite trading weaker on the day, the USD/INR pair maintains a bullish outlook. Since the start of June, the pair have exhibited a trend of higher highs and higher lows, indicating a positive trajectory. Key technical indicators, such as the 100-day Exponential Moving Average (EMA) and the 14-day Relative Strength Index (RSI) at 55.50, remain in bullish territory, suggesting continued upward momentum.

USD/INR Resistance at 83.60, Support at 83.35

The immediate resistance for USD/INR is observed at 83.60, corresponding to the high of June 11. Beyond this, the next resistance levels are 83.72 (high of April 17) and the psychological mark of 84.00. On the downside, the key support level is 83.35, marked by the 100-day EMA, followed by 83.00 (round figure) and 82.78 (low of January 15).