USD/INR gains traction on the renewed USD demand during US, India holidays

• Indian Rupee edges lower amid the recovery in USD.
• Many analysts predicted Q2 Indian GDP to expand faster than the RBI's 6.5%.
• Investors will monitor the US S&P Global PMI ahead of India’s quarterly growth numbers next week.

Indian Rupee (INR) loses ground on Friday as the US Dollar (USD) attracts some buyers during the session. India's economy has shown resilience in the face of the global downturn, owing to its dependence on local demand. Many analysts projected the second-quarter (Q2) Indian GDP from the Central Statistical Office to grow faster than the 6.5% expected by the Reserve Bank of India (RBI).

In the meantime, oil prices need to be closely monitored as the Organization of the Petroleum Exporting Countries and its allies (OPEC+) will hold their next meeting on November 30 to discuss oil supply cuts. That being said, India is particularly vulnerable to higher crude prices as the country is the world's third-biggest oil consumer.

The US market was closed on Thursday in observance of Thanksgiving Day, and the trading session on Friday will be shortened. Market players will keep an eye on the US S&P Global PMI data for fresh impetus. Next week, the Indian market will be closed on Monday for the Guru Nanak Jayanti holiday. Nonetheless, the highlight will be India’s Gross Domestic Product (GDP) Quarterly for the second quarter, due on Thursday.

Daily Digest Market Movers: Indian Rupee remains vulnerable to higher crude prices

• According to a Reuters poll of equity strategists, the Indian stock market is set to hit new highs in the next six months and rise over 10% by end-2024.
• The Reserve Bank of India (RBI) Governor Shaktikanta Das estimated a 6.5% growth in India's real GDP in fiscal years 2023-24 and 2024-25.
• RBI’s Das said the Indian Rupee has shown moderate volatility and orderly movements as compared to its peers despite elevated US Treasury yields and a strong USD.
• RBI's Das emphasized that India is vulnerable to food-price shocks from extreme weather events and global factors.
• India’s Ministry of Finance said in the report that the government and the RBI will closely monitor inflationary risks.
• RBI projected that average inflation will drop from 6.7% in the previous fiscal year to 5.4% in 2023-24.
• The US S&P Global Manufacturing PMI is estimated to drop from 50.0 to 49.8 and Services PMI is expected to fall from 50.6 to 50.4.
• The US Jobless Claims, Durable Goods Orders, and Consumer Sentiment suggested the economy is easing but remains strong enough to avoid recession.
• Market players believe the Federal Reserve (Fed) may be done raising interest rates and the economy is still resilient.

Technical Analysis: The Indian Rupee maintains its positive outlook

The Indian Rupee trades weaker on the day. The USD/INR pair breaks above the trading range of 82.80–83.35 since September. According to the daily chart, the technical outlook suggests that the bullish bias stays intact as the pair holds above the key 100-day Exponential Moving Average (EMA) with an upward slope. Furthermore, the 14-day Relative Strength Index (RSI) holds above the 50.0 midline, reflecting that further upside looks favorable.

That being said, the year-to-date (YTD) high of 83.47 will be the immediate resistance level for USD/INR, en route to a psychological round mark at 84.00. On the flip side, 83.35 acts as a throwback support. Any follow-through selling below 83.35 will see a drop to the confluence of the lower limit of the trading range and a low of September 12 at 82.80. A decisive break below 82.80 will pave the way to a low of August 11 at 82.60.