USD/INR strengthens despite Fed rate cut hope

• The Indian Rupee weakens in Thursday’s Asian session. 
• Higher crude oil prices weigh on the INR; rising US rate cut bets and Fed’s dovish view might cap the downside. 
• Investors await the US weekly Initial Jobless Claims and Philly Fed Manufacturing Index, which are due on Thursday. 

The Indian Rupee (INR) attracts some sellers on Thursday despite the weaker US Dollar (USD). The extended recovery in crude oil prices exerts some pressure on the INR as India is the world’s third-largest oil consumer. However, the downside for the local currency might be limited as rising odds of a September rate cut by the US Federal Reserve (Fed) could weigh on the Greenback and pressure US bond yields to come down. 

Later on Thursday, investors will monitor the weekly Initial Jobless Claims and the Philly Fed Manufacturing Index. Also, the Fed’s Lorie Logan is scheduled to speak. The dovish comments from the Fed officials might continue to undermine the USD in the near term. 

Daily Digest Market Movers: Indian Rupee extends decline amid global factors

• The International Monetary Fund (IMF) on Tuesday raised its economic forecasts this year for China, India, and Europe. India’s economy is estimated to grow 7% from the 6.8% the IMF had projected in April, owing to stronger consumer spending in rural areas.
• Fed Governor Christopher Waller said on Wednesday that the US central bank is ‘getting closer’ to an interest rate cut as inflation's improved trajectory and a labor market in better balance. 
• Richmond Fed President Thomas Barkin said he is "very encouraged" that easing in inflation has begun to broaden and he would like to see it continue.
• The US Building Permits increased by 3.4% to 1.446 million in June from 1.399 million in May, while Housing Starts for the same period rose by 3.0% to 1.353 million from 1.314 million. 
• US Industrial Production climbed 0.6% MoM in June from the previous reading of 1.0%, beating the estimation of a 0.3% increase. 

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

The Indian Rupee trades on a softer note on the day. The trend of the USD/INR pair appears to be bullish as the pair makes higher highs and higher lows. Additionally, USD/INR holds above the key 100-day Exponential Moving Average (EMA) on the daily chart. The 14-day Relative Strength Index (RSI) points higher above 57.35, suggesting that further upside could be on the horizon.

In the shorter term, the pair has remained confined within its month-long trading range since March 21.

A decisive break above the upper boundary of the trading range at 83.65 will pave the way to the all-time high of 83.75. Further north, the next hurdle to watch is the 84.00 psychological level. 

On the other hand, the initial downside target will emerge near the 100-day EMA at 83.38. Extended losses will see a drop to the lower limit of the trading range and round figure at 83.00, followed by 82.82, a low of January 12.