USD/INR holds steady as traders await more cues on potential Fed rate cuts

• The Indian Rupee trades steady in Monday’s Asian session. 
• RBI’s intervention and lower crude oil prices might underpin INR; foreign outflows and strong USD demand might limit its upside. 
• The first reading of HSBC India PMI will be released on Wednesday ahead of Fed Chair Powell's speech. 

The Indian Rupee (INR) flatlines on Monday despite the softer US Dollar (USD). India’s foreign outflows and strong USD demand from importers remain exerting some selling pressure on the INR. Despite multiple headwinds, the local currency is supported by the Reserve Bank of India (RBI’s) intervention, which is likely to sell USD to stabilize and prevent the INR from a breach of the crucial 84.00 level. 

Furthermore, the decline of crude oil prices is likely to support the INR as India remains one of the top importers of crude oil. The preliminary HSBC India Purchasing Managers Index (PMI) will be published on Wednesday. On the US docket, the Federal Reserve (Fed) Chair Jerome Powell's speech will be in the spotlight this Friday as traders will take more cues about potential interest rate cuts. The dovish remarks from the Fed officials might drag the Greenback lower and cap the pair’s upside. 

Daily Digest Market Movers: Indian Rupee faces challenges from both domestic and global factors

• India's exports were 6% lower in the current fiscal year through July compared to the same period last year. In FY24, foreign direct investment in the country fell by 3.5%. Foreign portfolio investors (FPI) have withdrawn funds from India due to the country's overheated equities market. 
• Consumer sentiment rebounded in August for the first time in five months. The preliminary University of Michigan Consumer Sentiment Index came in at 67.8 in August versus 66.4 prior, better than the 66.9 estimated.
• The US Housing Starts plunged by 6.8% to an annual rate of 1.238 million in July after jumping by 1.1% to a revised rate of 1.329 million in June, the Commerce Department reported on Friday. Building Permits decreased by 4.0% to an annual rate of 1.396 million in July after surging by 3.9% to a revised rate of 1.454 million in June.
• Federal Reserve Bank of Chicago President Austan Goolsbee said on Sunday that the US central bank officials should be wary of keeping the restrictive policy in place longer than necessary.
• San Francisco Fed President Mary Daly called for a "prudent" approach to lowering rates while pushing back on economists’ concerns that the US economy is heading for a sharp slowdown. 

Technical analysis: USD/INR’s bullish outlook prevails

Indian Rupee trades flat on the day. According to the daily chart, the USD/INR is in a bullish phase, with the price holding above the key 100-day Exponential Moving Average (EMA) and the 11-week-old uptrend line. The 14-day Relative Strength Index (RSI) stands above the midline near 56.80, supporting a continuation of the uptrend.

A crucial resistance level for USD/INR emerges at the 84.00 psychological level. A break above the mentioned level could expose the record high of 84.24, followed by 84.50. 

On the other hand, the initial target could be the uptrend line at 83.88, with potential further downside if the bearish momentum continues. A breach of this level will pave the way to the 100-day EMA at 83.55 en route to 83.36, the low of June 28.