USD/INR strengthens as month-end US Dollar demand drags Indian Rupee lower

• The Indian Rupee attracts some sellers in Wednesday’s early Asian session. 
• The weakening in Asian peers and month-end USD demand weigh on the INR. 
• Investors await the Fed's Waller and Bostic speeches on Wednesday for fresh impetus. 

The Indian Rupee (INR) extends its losses on Wednesday, pressured by the weakness in Asian peers and US Dollar (USD) demand from importers. Nonetheless, positive domestic markets and Federal Reserve (Fed) Chair Jerome Powell's dovish comments at the Jackson Hole meeting last week might cushion the local currency’s downside. 

Later on Wednesday, the Fed's Christopher Waller and Raphael Bostic are scheduled to speak. The advanced US Gross Domestic Product (GDP) Annualized for the second quarter (Q2) will be published on Thursday, which is projected to grow 2.8%. On Friday, the US Personal Consumption Expenditures (PCE) Price Index and Indian GDP Quarterly for the first quarter (Q1) of fiscal 2024-25 (FY25) will be in the spotlight. 

Daily Digest Market Movers: Indian Rupee looks fragile despite dovish Fed

• The International Monetary Fund (IMF) projected that India’s real GDP growth will touch 7% in 2024 to remain the fastest-growing major economy in the world. 
• According to a Reuters poll, India's economic growth in the April-June quarter was anticipated to expand at its slowest pace in a year owing to lower government spending.
• The Conference Board's US Consumer Confidence Index rose to 103.3 in August from an upwardly revised 101.9 in July, marking a six-month high. 
• The US House Price Index dropped by 0.1% MoM in June, better than the estimation of a 0.2% increase, the Federal Housing Finance Agency showed onTuesday. 
• Futures are currently pricing in a near 34.5% chance of a half-percentage point cut in interest rates, according to the CME FedWatch Tool. 

Technical Analysis: USD/INR’s positive outlook remains in play 

The Indian Rupee weakens on the day. Technically, the constructive picture of the pair remains intact as the price is above the key 100-day Exponential Moving Average (EMA) on the daily timeframe. The 14-day Relative Strength Index (RSI) remains above the midline near 58.00, suggesting that the support level is likely to hold rather than break. 

The first upside barrier to watch for USD/INR is the support-turned-resistance level at the 84.00 psychological level. Any follow-through buying above this level could pave the way to the next hurdle near the record high of 84.24 en route to 84.50. 

In the bearish event, the low of August 20 at 83.77 acts as an initial support level for the pair. Extended losses could expose the 100-day EMA at 83.60.