The Indian Rupee (INR) edged higher on Monday as the US Dollar (USD) experienced a modest decline. This rise in the value of the INR can be attributed to the optimistic economic outlook in India and the continuous inflow of foreign investments into the country. Foreign portfolio investors have significantly increased their holdings of Indian government bonds in recent months, reflecting confidence in the Indian economy.
Despite the positive momentum, there are several factors that could potentially limit the upside of the INR. Factors such as a risk-averse environment, rising crude oil prices, and increasing US Treasury bond yields might create a tailwind for the USD/INR pair. Investors are closely monitoring the upcoming US Federal Reserve interest rate decision, which is expected to keep rates unchanged at the upcoming meeting. The market will also focus on Fed Chairman Jerome Powell’s comments during the press conference for clues about the future trajectory of US interest rates.
On Thursday, India is set to release its S&P Global Manufacturing and Services PMI data. Recent reports indicate that India’s merchandise trade deficit widened in February, driven by a surge in gold imports amid geopolitical tensions. Goods imports increased, while exports also saw a rise during the same period, according to the commerce ministry.
In the US, the University of Michigan Consumer Sentiment Index slightly eased in March, falling below expectations. While US Industrial Production showed improvement in February, with a positive month-on-month growth rate. These economic indicators could have implications for the USD/INR pair going forward.
From a technical standpoint, USD/INR remains within a descending trend channel, indicating a bearish outlook for the pair. The 100-day Exponential Moving Average and the Relative Strength Index both point towards downward momentum in the near term. Support levels for USD/INR are identified near the lower limit of the descending trend channel, with potential resistance around the 100-day EMA and psychological levels. Traders are advised to monitor key levels for potential breakout opportunities.
The US Dollar exhibited varying performance against major currencies this week, with notable weakness against the New Zealand Dollar. A heat map of percentage changes among major currencies provides a visual representation of the fluctuations in currency values. Traders can utilize this information to assess market trends and make informed trading decisions.
The Indian Rupee has shown resilience against the US Dollar, driven by positive economic indicators and foreign investor confidence. However, global factors and economic data releases could influence the future performance of the USD/INR pair. Traders are advised to stay informed and monitor key levels for potential trading opportunities in the currency market.
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