USD/INR extends recovery, all eyes on US GDP data

• Indian Rupee trades with mild negative bias on Thursday. 
• The INR’s downside might be capped, owing to a further decline in crude oil prices. 
• Market players will closely monitor the US preliminary GDP growth number for the first quarter (Q1).

Indian Rupee (INR) extends its downside on Thursday despite the decline of the US Dollar (USD). The growing speculation that the US Federal Reserve (Fed) will delay interest rate cuts boosts the Greenback against its rivals. Nonetheless, the upside of the pair might be limited due to a further decline in crude oil prices amid easing tensions about a wider fallout between Iran and Israel.

Investors will closely monitor the US preliminary Gross Domestic Product (GDP) Annualized for the first quarter (Q1). The report could offer a clue of how strongly the US economy is growing and point to the Fed's next move. On Friday, the final reading of the US March Personal Consumption Expenditures Price Index (PCE) will be a closely watched event. Apart from this, India’s general election, which started on 19 April and will run until 1 June, will be in the spotlight. 

Daily Digest Market Movers: The Indian Rupee remains vulnerable at the start of the election

• In mid-April, India’s foreign exchange reserves stood at USD 564.5 billion (+48 billion over a year), equating to more than 7.6 months of goods and services imports.
• The Indian rupee remains stable at the start of the election period, holding up better than other Asian currencies so far. Since the start of April, it has only depreciated by 0.6% against the US Dollar.
• The Indian economy needs to grow at a rate of 8–10% per annum over the next decade to reap the demographic dividend, according to the Reserve Bank of India (RBI) monthly bulletin.
• The main economic challenge for the Indian government after the election is unemployment, according to economists polled by Reuters, who forecast India to expand at a solid 6.5% this fiscal year.
• The US Durable Goods Orders improved 2.6% MoM or $7.3 billion, to $283.4 billion in March, compared to the 0.7% increase (revised from 1.4%) in February. The increase in overall orders was the biggest since November 2023
• Durable Goods Orders ex Transportation rose by 0.2% MoM in March, while new orders excluding defense rose 2.3% MoM in the same period. Both figures came in below the consensus. 

Technical analysis: USD/INR keeps the bullish vibe in the longer term

The Indian Rupee trades on a softer note on the day. USD/INR maintains the positive outlook unchanged on the daily timeframe as the pair is above the key 100-day Exponential Moving Average (EMA). Nonetheless, the 14-day Relative Strength Index (RSI) hovers around the 50.00 midlines, suggesting that further consolidation is favorable for the time being. 

The first upside barrier for USD/INR will emerge at 83.50 (high of April 15). Any follow-through buying above this level will expose 83.72 (an all-time high), en route to 84.00 (round figure). On the other hand, the confluence of the 100-day EMA and a low of April 10 near the 83.10–83.15 zone. The additional downside filter to watch is 82.78 (low of January 15), followed by 82.65 (low of March 16).