USD/INR gathers strength on the first trading day of 2024

• Indian Rupee loses traction on the modest rebound of the US Dollar.
• Finance Ministry said India's economy is expected to surpass the government's growth estimate of 6.5% in FY24.
• The US labor data, including US Nonfarm Payrolls (NFP), will be in the spotlight this week.

Indian Rupee (INR) trades on a soft note on the first trading day of 2024 on Tuesday. India’s Finance Ministry said in its half-yearly economic review report on Friday that India's economy is projected to surpass the government's growth estimate of 6.5% in FY24. The ministry further stated that the growth in consumption demand is also expected to continue. Additionally, the relatively steady Indian Rupee with substantial foreign currency reserves encourages confidence in the country's external sector.

The INR is likely to be influenced by the US Dollar (USD) dynamic this week while traders keep an eye on the US labor data, including US Nonfarm Payrolls (NFP), Unemployment Rate, and Average Hourly Earnings, due later on Friday.

Daily Digest Market Movers: Indian Rupee remains strong amid global factors

• The Reserve Bank of India (RBI) has constantly intervened in foreign currency markets on both sides in recent weeks, keeping the USD/INR pair in a narrow range, according to traders.
• The International Monetary Fund (IMF) stated in its annual report that India had intervened in selling dollars more than it deemed necessary.
• Indian Finance Ministry mentioned that the real GDP grew by 7.7% in H1 of FY24, following a 7.6% growth in Q2.
• India's current account deficit narrowed to $8.3 billion in the second quarter of 2023–24.
• The US Chicago Purchasing Managers' Index (PMI) arrived at 46.9 in December from the previous reading of 55.8, weaker than the expectation of 51.0.
• According to the CME Group's FedWatch tool, the markets are pricing in 88% odds of rate cuts in March.

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

Indian Rupee trades weaker on the day. The USD/INR pair has traded within a multi-month-old trading band of 82.80–83.40. According to the daily chart, buyers look to retain control as the pair holds above the key 100-period Exponential Moving Average (EMA). Furthermore, the 14-day Relative Strength Index (RSI) bounces back above the 50.0 midpoint, suggesting that further upside looks favorable.

The first support level will emerge at 83.00. A break below 83.00 will see a drop to the confluence of the lower limit of the trading range and a low of September 12 at 82.80. Further south, the next contention is located near a low of August 11 at 82.60. On the other hand, the immediate resistance level is near the upper boundary of the trading range at 83.40. The additional upside filter to watch is the year-to-date (YTD) high of 83.47, followed by the 84.00 psychological mark.