September 24, 2024
New Delhi, India
USDINR Today
The Indian Rupee (INR) weakened for the second consecutive day on Tuesday, pushing the USD/INR pair towards the 100-day Simple Moving Average (SMA) resistance around 83.65. A slight increase in US Treasury yields supported demand for the US Dollar (USD), acting as the primary driver for the currency pair’s movement.
Modest USD Demand Amid Rising Yields
The uptick in US Treasury bond yields renewed USD demand, applying pressure on the INR. However, expectations of a dovish stance from the Federal Reserve, with potential interest rate cuts in the near future, might cap any significant upward momentum for the USD and limit losses for the INR.
Fed Rate Path Remains Key Focus
Market participants are closely watching speeches from Federal Open Market Committee (FOMC) members and key economic data, including the US Personal Consumption Expenditures (PCE) Price Index, due on Friday. These could provide clearer insights into the Fed’s rate-cut trajectory, influencing further movement in the USD/INR pair.
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PMI Data and Market Sentiment
Economic data from both the US and India also shaped the market sentiment. The US Manufacturing PMI dropped to a 15-month low of 47.0 in September, while the Services PMI eased slightly to 55.4. In India, the Manufacturing PMI fell to 56.7 from 57.5 in August, and the Services PMI declined to 58.9 from 60.9.
Dovish Fed Outlook Could Limit USD Upside
Several Federal Reserve officials have indicated the possibility of more rate cuts. Minneapolis Fed President Neel Kashkari anticipates quarter-point cuts in the remaining meetings of the year, while Chicago Fed President Austan Goolsbee and Atlanta Fed President Raphael Bostic have expressed the need for further rate reductions to balance inflation and employment risks.
The INR’s recent weakness is driven by rising US bond yields, but traders remain cautious, awaiting further signals on the Fed’s rate path before making significant directional bets.
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