USD/INR loses recovery momentum on softer USD, focus on US Jobless Claims

• Indian Rupee trades on a positive note on the weaker US Dollar.
• CEBR stated in its report that India is expected to be the largest economic superpower by 2100.
• US Initial weekly Jobless Claims, November’s Trade Balance and Pending Home Sales will be released on Thursday.

Indian Rupee (INR) recovers its recent losses on Thursday amid the US Dollar (USD) weakness. India is set to become the world's third-biggest by 2032 and will eventually surpass China and the United States to become the "world's largest economic superpower" by 2100, the Centre for Economics and Business Research (CEBR) stated in its report on Wednesday. Earlier this week, Fitch Ratings projected India to be the world’s fastest-growing country, with resilient GDP growth of 6.5% during fiscal 2024–25.

Nonetheless, the next general elections in India will be closely watched by investors as the outcomes will significantly impact India's domestic and foreign policy. Later on Thursday, market players will focus on the US Initial weekly Jobless Claims, Trade Balance for November, and Pending Home Sales. These figures might not have a significant impact on the market as traders enter holiday mode heading into 2024.

Daily Digest Market Movers: Indian Rupee shows resilience amid multiple headwinds

• According to the Reserve Bank of India (RBI), the Gross Non-Performing Asset (GNPA) ratio of Indian banks improved further in the second quarter of the current fiscal year, easing to a new decadal low.
• India's current account deficit narrowed to $8.3 billion in the second quarter of 2023–24.
• India's foreign currency reserves were $606.9 billion on December 8, ranking fourth among major foreign exchange reserve-holding countries, and increased by $28.4 billion during 2023–2024.
• The US Richmond Fed Manufacturing Index fell to 11 in December from a 5 drop in November, below the market consensus of -7.
• The US Dallas Fed Manufacturing Business Index for December came in at -9.3 versus -19.9 prior. November's Chicago Fed National Activity Index arrived at 0.03 from a 0.49 decline in the previous reading.

Technical Analysis: Indian Rupee extends the longer-term range theme

Indian Rupee trades firmer on the day. The USD/INR pair maintains a multi-month-old trading band of 82.80–83.40 unchanged. From a technical perspective, the further upside of USD/INR looks favorable as the pair holds above the key 100-period Exponential Moving Average (EMA) on the daily chart. The 14-day Relative Strength Index (RSI) contributed to the upward momentum as it bounces back above the 50.0 midpoint.

The immediate resistance level of the pair will emerge at the upper boundary of the trading range at 83.40. Further north, the year-to-date (YTD) high of 83.47 and the 84.00 psychological mark will be the next upside targets. On the downside, the critical support level for USD/INR is seen near the round figure at 83.00. The additional downside filter to watch is the confluence of the lower limit of the trading range and a low of September 12 at 82.80. A breach of this level will pave the way to a low of August 11 at 82.60.