USD/INR Gains Momentum Ahead of FOMC Minutes Release.

USD/INR Strengthens Ahead of FOMC Minutes: Key Market Drivers & Technical Outlook

The Indian Rupee (INR) continues to face pressure against the US Dollar (USD) on Wednesday, trading in negative territory as multiple factors weigh on the local currency. A surge in USD demand, driven by position maturity in the non-deliverable forwards (NDF) market and weakness in most Asian currencies, is contributing to INR’s decline. Additionally, foreign fund outflows from Indian equities and a rebound in crude oil prices are further impacting the rupee’s stability.

RBI Intervention & FOMC Minutes in Focus

Despite the ongoing weakness, the Reserve Bank of India (RBI) may intervene by selling USD to curb excessive INR depreciation. Meanwhile, market participants are closely monitoring the upcoming FOMC Minutes, set for release later today, as they could provide further direction for USD/INR movements. Additionally, US economic data, including Housing Starts and Building Permits, will be released, potentially influencing market sentiment.

India’s Economic Growth Outlook

India’s GDP growth is projected to slow to 6.6% in Q3FY25, down from 8.6% in the same quarter of the previous fiscal year, according to the Bank of Baroda. On the other hand, ICRA estimates GDP expansion at 6.4%, reflecting a recovery from the seven-quarter low of 5.4% in Q2FY25.

Meanwhile, in the US, the NY Empire State Manufacturing Index surged to 5.7 in February, recovering from -12.6 in January. San Francisco Fed President Mary Daly also stated that rate cut prospects in 2025 remain uncertain, despite positive US economic indicators.

USD/INR Technical Outlook: Bullish Bias Prevails

From a technical perspective, USD/INR maintains a bullish bias on the daily timeframe, with the price holding above the 100-day Exponential Moving Average (EMA). The 14-day Relative Strength Index (RSI) sits around 56.0, indicating further upside potential.

• Key resistance levels:

  • 87.00 (psychological barrier)
  • 88.00 (all-time high)
  • 88.50 (next target)

• Support levels to watch:

  • 86.58 (Feb 17 low)
  • 86.35 (Feb 12 low)
  • 86.14 (Jan 27 low)

If USD/INR sustains trading above 87.00, the pair could see a renewed bullish push toward 88.00 and beyond. However, in case of a downside correction, support at 86.58 and 86.35 will be critical levels to watch.

Final Thoughts

The USD/INR exchange rate remains volatile as global economic factors, RBI interventions, and upcoming FOMC Minutes shape market sentiment. With ongoing fluctuations in oil prices, foreign investments, and US economic data, traders should stay vigilant for potential breakouts or corrections in the coming sessions.

Stay updated on USD/INR trends and key market developments.