USD/INR recovers ahead of US PCE data

• Indian Rupee softens in Friday’s Asian session. 
• The month-end importer USD bids and likely position unwinding weigh on the INR. 
• The US August PCE Price Index data will take center stage on Friday. 

The Indian Rupee (INR) loses momentum on Friday amid the renewed US Dollar (USD) demand from importers related to month-end payments and the likely unwinding of long positions. Nonetheless, a fall in crude oil prices and a robust trend in Indian equities might help limit the INR’s losses. 

Investors will closely monitor the release of the US August Personal Consumption Expenditures (PCE) Price Index, the Fed’s preferred inflation indicator, on Friday. The headline PCE is forecast to show an increase of 2.3% YoY in August, while the core PCE is estimated to show a rise of 2.7% YoY in the same report. Also, the Michigan Consumer Sentiment Index for September will be released later in the day. 

Daily Digest Market Movers: Indian Rupee declines due to USD demand related to month-end payments 

• "Over the week, the (dollar-rupee) pair has opened lower, only to rebound as importers rush to meet month-end dollar demand, causing USD/INR to close higher," said Amit Pabari, managing director at FX advisory firm CR Forex.
• India’s Sensex climbed 666.25 points to settle at an all-time high of 85,836.12, while Nifty rose 211.90 points to hit a record of 26,216.05.
• US Durable Goods Orders were flat in August, compared to a rise of 9.9% in July, according to the US Census Bureau. This figure came in better than the estimation of a decline of 2.6%. 
• The US Gross Domestic Product (GDP) increased at an annual rate of 3.0% in the second quarter (Q2), as previously estimated, the US Bureau of Economic Analysis (BEA) showed Thursday. 
• Fed Governor Lisa Cook stated on Thursday that she endorsed the 50 bps interest rate cut last week as a way to address increased "downside risks" to employment, per Reuters. 

Technical Analysis: USD/INR’s bearish outlook remains intact

The Indian Rupee weakens on the day. Technically, the USD/INR pair maintains a negative view on the daily chart as the price remains capped under the key 100-day Exponential Moving Average (EMA). The downward momentum is reinforced by the 14-day Relative Strength Index (RSI), which is located below the midline near 39.30, suggesting that further downside cannot be ruled out. 

The low of September 23 acts as an initial support level for USD/INR. Sustained trading below this level could lead the pair to drop to 83.00, representing the psychological level and the low of May 24. 

On the upside, a decisive break above the 100-day EMA at 83.62 could set the pair up for a retest of the support-turned-resistance level at 83.75. The additional upside filter to watch is the 84.00 round mark.