USD/INR extends its upside ahead of Indian, US Services PMI data

• Indian Rupee (INR) trades on a softer note on the modest US Dollar demand.
• Analysts said global economic growth is likely to surprise on the upside, and only modest headwinds for India next fiscal.
• Investors await the Indian S&P Global Services PMI and the US ISM Services PMI for February on Tuesday.

Indian Rupee (INR) edges lower on Tuesday amid the modest rebound of the US Dollar (USD). India’s GDP grew at its fastest pace in 18 months, expanding 8.4% over a year earlier in the October-December quarter. Additionally, most high-frequency indicators continued to grow, showing signs of resilient economic activity.

Furthermore, most high-frequency indicators continued to improve, indicating strong economic activity. S&P Global Ratings Global Chief Economist, Paul Gruenwald said that global economic growth is likely to surprise on the upside, and hence he sees only modest headwinds for India next fiscal.

Market players will keep an eye on the Indian S&P Global Services PMI and US ISM Services PMI for February, due on Tuesday. Later this week, the attention will be on the Fed's Chair Jerome Powell testifying on Wednesday ahead of the US Nonfarm Payrolls (NFP) on Friday.

Daily Digest Market Movers: Indian Rupee weakens amid the uncertainties

• India's GDP growth is projected to grow 6.8% for the 2024 calendar year from 6.1% earlier, according to the global rating agency Moody's.
• The Reserve Bank of India (RBI) is expected to take delivery of a $5 billion FX swap due next week, owing to adequate dollar inflows and rupee liquidity staying on the tighter side.
• India's foreign exchange reserves rose by $2.975 billion to $619.072 billion for the week ending on February 23, according to the RBI.
• Indian S&P Global Services PMI is estimated to improve from 61.8 in January to 62.0 in February.
• Fed President Raphael Bostic said on Monday that the central bank is under no urgent pressure to cut interest rates given a "prospering" economy and job market.

Technical Analysis: Indian Rupee inches lower within a longer-term band of 82.65-83.15

Indian Rupee trades weaker on the day. USD/INR remains confined within a multi-month-old descending trend channel between 82.65 and 83.15 since December 8, 2023.

USD/INR keeps the bearish vibe unchanged in the near term as the pair holds below the 100-day Exponential Moving Average on the daily timeframe. Additionally, the 4-day Relative Strength Index (RSI) lies in the bearish territory below the 50.0 midlines, suggesting that further decline looks favorable.

The first downside target will emerge at the lower limit of the descending trend channel at 82.65. Any follow-through selling will see a drop to a low of August 23, and finally a low of June 1 at 82.25.

On the upside, the key resistance level is located at 83.00, representing the 100-day EMA and a psychological round figure. A decisive break above the latter will see a rally to a high of January 2 at 83.35, en route to 84.00.