USDINR Gains Traction as Investors Eye US Job Data and Indian Economic Outlook


January 4, 2024

New Delhi, India

USDINR Strengthens Amidst Global Economic Landscape:

The USDINR currency pair is exhibiting strength, with the Indian Rupee facing headwinds against the US Dollar. This comes amid a global economic landscape that demands careful attention.

Goldman Sachs Predicts Positive Trajectory for Indian Economy:

In a positive outlook for 2024, Goldman Sachs Chief India Economist Santanu Sengupta anticipates a favourable trajectory for the Indian economy. The sentiment is underpinned by expectations of significant foreign capital inflows and the Reserve Bank of India’s proactive approach in accumulating reserves.

Mixed Signals from Indian Economic Indicators:

Despite India’s foreign exchange reserves reaching a 21-month high at $620.44 billion, the S&P Global Manufacturing PMI for December slightly lags behind market consensus. Citi economists forecast a modest drop in India’s GDP growth rate for the fiscal year 2025.

Global Economic Events on the Horizon:

Investors are closely watching the US ADP Employment Change and Initial Weekly Jobless Claims scheduled for later in the week. The upcoming US Nonfarm Payrolls (NFP) figure for December is expected to reveal insights into the employment landscape, with the previous month showing an increase of 199K jobs.

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Technical Analysis Supports USD/INR Upside Momentum:

The USDINR pair remains within a multi-month trading range of 82.80–83.40. Technical analysis indicates a favorable upside as the pair holds above the key 100-period Exponential Moving Average (EMA). The 14-day Relative Strength Index (RSI) above the 50.0 midpoint supports upward momentum.

Key Levels to Watch in USD/INR Trading:

Resistance levels are identified at 83.40, 83.47, and the psychological figure at 84.00. On the downside, initial support lies at 83.00, with additional downside potential at the lower limit of the trading range (82.80) and a low of August 11 at 82.60.

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Looking Ahead: Indian Elections and Global Economic Dynamics:

The mid-2024 Indian election is a focal point for investors, potentially influencing market sentiment. As the global economic picture remains nuanced, challenges may emerge despite India’s impressive 6.5% economic expansion in 2023.

In conclusion, the USDINR dynamics are influenced by a confluence of factors, from economic indicators and global events to technical analysis. Traders and investors are urged to stay vigilant, especially with upcoming releases of critical economic data and the unfolding narrative of the Indian economic landscape.

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