USD/INR softens ahead of Indian/US PMI releases

• The Indian Rupee gathers strength in Friday’s Asian session. 
• Significant US Dollar sales and easing concerns on trade tensions underpin the INR. 
• The preliminary Indian and US PMI reports for February will be the highlights later on Friday. 

The Indian Rupee (INR) gains ground on Friday after reaching a one-week high in the previous session. The massive US Dollar (USD) sales by foreign banks provide some support to the local currency. US President Donald Trump's optimistic comments on a fresh trade deal with China, not only lift the Chinese Yuan but also boost the INR. Any significant depreciation of the Indian Rupee might be limited amid the likely intervention by the Reserve Bank of India (RBI). 

Nonetheless, Foreign Portfolio Investment (FPI) outflows and the renewed Greenback demand could weigh on the local currency. The recovery in crude oil prices might also contribute to the INR’s downside as India is the world's third-largest oil consumer. 

Traders await the advanced India’s HSBC Purchasing Managers Index (PMI) report for February, which is due later on Friday. On the US docket, the S&P Global PMI, Existing Home Sales and Michigan Consumer Sentiment Index report will be released. Also, the Federal Reserve’s (Fed) Mary Daly and Philip Jefferson are set to speak on the same day. 

Indian Rupee strengthens amid easing trade tensions

• India's growth is estimated to slow to 6.4% in 2025 from 6.6% in 2024, as new US tariffs and softening global demand weigh on exports, said Moody's Analytics on Thursday. 
• US President Donald Trump said on Wednesday he will announce fresh tariffs within the next month, adding lumber and forest products to previously announced plans to impose duties on imported cars, semiconductors and pharmaceuticals. 
• The US Initial Jobless Claims for the week ending February 15 rose to 219,000, compared to the previous week's 214,000 (revised from 213,000), according to the US Department of Labor (DoL) on Thursday. This figure came in above the market consensus of 215K.
• Fed Board Governor Adriana Kugler said late Thursday that US inflation still has "some way to go" to reach the central bank's 2% target and that its path toward that goal continues to be bumpy. 
• St. Louis Fed President Alberto Musalem said the risk of inflation could remain high, adding that he needs confidence that inflation is waning to support more rate cuts. 

USD/INR bulls take a breather 

The Indian Rupee trades on a stronger note on the day. The USD/INR pair paints the positive picture on the daily chart, with the price holding above the key 100-day Exponential Moving Average (EMA). However, further consolidation or downside cannot be ruled out as the 14-day Relative Strength Index (RSI) stands below the midline near 48.0. 

The immediate resistance level for USD/INR emerges at the 87.00 psychological level. Bullish candlesticks and sustained trading above this level could set its sights on an all-time high near 88.00, en route to 88.50. 

On the flip side, if the pair can’t hold the line at 86.35, the low of February 12, a drop toward 86.14, the low of January 27, could be on the cards. The next contention level to watch is 85.65, the low of January 7.