USD/INR strengthens ahead of Fed Chair Powell’s second testimony

• 
  The
  Indian
  Rupee
  edges
  lower
  in
  Wednesday’s
  Asian
  session. 
• 
  The
  renewed
  US
  Dollar
  demand
  might
  weigh
  on
  the
  local
  currency,
  while
  sustained
  Indian
  foreign
  inflows
  could
  underpin
  the
  INR. 
• 
  Fed
  Chair
  Jerome
  Powell’s
  second
  testimony
  will
  be
  in
  the
  spotlight
  on
  Wednesday. 

The
Indian
Rupee
(INR)
trades
on
a
weaker
note
on
Wednesday
amid
the
modest
rebound
of
the
US
Dollar
(USD).
The
persistent
Greenback
demand
from
local
importers
might
continue
to
limit
the
local
currency’s
gains.
However,
sustained
Indian
foreign
inflows,
a
positive
economic

outlook,
and
the
fastest
macroeconomic
growth
among
large
economies
might
all
contribute
to
the
INR’s
upside.

Traders
will
focus
on
the
second
semi-annual
testimony
by

Federal
Reserve
(Fed)
Chair
Jerome
Powell
on
Wednesday.
The
attention
will
shift
to
the
US
Consumer
Price
Index
(CPI)
inflation
data
on
Thursday.
The
US
CPI
is
projected
to
show
an
increase
of
3.1%
YoY
in
June,
while
core
inflation
is
projected
to
remain
steady
at
3.4%
YoY.
Any
dovish
comments
from
the
Fed’s
Powell
or
signs
of
softer
inflation
in
the
US
might
exert
some
selling
pressure
on
the
Greenback. 

Daily
Digest
Market
Movers:
Indian
Rupee
weakens
despite
India’s
optimistic
outlook

• The
  Reserve
  Bank
  of
  India
  said
  on
  Monday
  that
  the
  country
  added
  46.7
  million
  jobs
  in
  the
  fiscal
  year
  ended
  March,
  the
  highest
  since
  1981-1982. 
• India’s
  central
  bank
  added
  $5.6
  billion
  in
  Gold
  reserves
  in
  the
  June
  quarter,
  with
  foreign
  currency
  assets
  increasing
  by
  $1.9
  billion
  and
  the
  value
  of
  gold
  in
  reserves
  rising
  by
  $3.8
  billion.
  As
  of
  June
  28,
  India’s
  foreign
  currency
  reserves
  were
  at
  $652
  billion.
• Fed
  Chair
  Jerome
  Powell
  said
  in
  testimony
  Tuesday
  to
  Congress
  that
  the
  case
  for
  interest
  rate
  cuts
  is
  becoming
  stronger
  as
  the
  most
  recent
  inflation
  data
  showed
  some
  modest
  further
  progress. 
• Powell
  added
  that
  “more
  good
  data”
  could
  open
  the
  door
  to
  interest
  rate
  cuts.
  He
  noted
  that
  holding
  interest
  rates
  too
  high
  for
  too
  long
  could
  jeopardize
  economic
  growth. 
• Powell’s
  remarks
  have
  helped
  push
  up
  the
  chance
  of
  a
  September
  rate
  cut
  by
  the
  Fed
  to
  above
  75%,
  up
  from
  71%
  before
  the
  US
  employment
  data
  last
  Friday,
  according
  to
  the
  CME’s
  FedWatch
  tool.

Technical
analysis:
USD/INR
remains
in
consolidative
mode
in
the
near
term

The
Indian
Rupee
trades
softer
on
the
day.
The
bullish
bias
of
the

USD/INR
pair
continues
as
the
pair
holds
above
the
key
100-day
Exponential
Moving
Average
(EMA)
on
the
daily
chart. 

In
the
shorter
term,
further
consolidation
looks
favorable
as
the
pair
has
remained
stuck
within
a
familiar
trading
range
since
March
21.
Additionally,
the
14-day
Relative
Strength
Index
(RSI)
showed
neutral
momentum,
hovering
around
the
50-midline.

Sustained
upside
momentum
could
lift
USD/INR
to
83.65,
the
upper
boundary
of
the
trading
range.
A
break
above
this
level
could
attract
some
buying
interest
to
the
all-time
high
of
83.75
en
route
to
the
84.00
psychological
barrier. 

On
the
flip
side,
the
100-day
EMA
at
83.36
acts
as
an
initial
support
level
for
the
pair.
Extended
losses
will
expose
the
83.00
round
mark,
followed
by
82.82,
a
low
of
January
12.