Indian Rupee eyes the biggest weekly loss in five above 83.00 despite latest bounce

• USD/INR eases from a three-week high while snapping two-day winning streak.
• Sluggish US Dollar, mixed China data allow Indian Rupee to pare weekly losses.
• Cautious mood in Asia, pullback in Oil Price prod pair buyers amid anxiety ahead of US data, Fed talks.

USD/INR takes offers to extend the early-day reversal from a three-week high to 83.10 heading into Thursday’s European session. In doing so, the Indian Rupee (INR) pair prints the first daily loss in three amid a mixed cautious mood ahead of a slew of US data and Federal Reserve (Fed) policymakers’ speeches.

It’s worth noting, however, that the Indian Rupee (INR) pair remains on the way to posting the biggest weekly loss in five despite the latest retreat amid the firmer US Dollar and strong Oil Price. That said, the mixed China foreign trade numbers seemed to have allowed the USD/INR pair buyers to take a breather.

China’s headline Trade Balance eased to $68.3 billion in August from $80.6 billion, versus $73.9 billion prior whereas the Exports and Imports for the said month improved to -8.8% YoY and -7.3% YoY respectively versus -14.5% and -12.4% priors in that order.

On the other hand, the US Dollar Index (DXY) struggled at the highest level in six months, indecisive at 104.85 at the latest whereas WTI crude oil eased from a 10-month high, marked earlier in the week, to $86.75 by the press time.

Despite the recently mixed China data, pessimism surrounding the Asian leaders remains in the spotlight amid the early-week disappointment via China Caixin Services PMI, as well as the market’s lack of confidence in the Dragon Nation’s stimulus. The same contrasts with mostly upbeat US data and hawkish Fed talk to propel the US Dollar’s haven demand.

Additionally, favoring the Greenback and the USD/INR pair could be the US-China tension surrounding the trade conditions and Taiwan, as well as concerns favoring the soft landing in the US. The strong US activity and output data join the hawkish Federal Reserve (Fed) signals to highlight the US Dollar as the market’s favorite. On the same line could be the Fed’s Beige Book suggesting a soft landing in the US.

It should be observed that a surprise output cut extension by Russia and Saudi Arabia contrasts with a slightly lower inventory draw to prod the Oil buyers at the highest level since November 2022. That said, India relies heavily on energy imports and strong WTI crude oil prices keep weighing on the Rupee.

Looking forward, the USD/INR pair traders should watch Chinese catalysts for immediate directions ahead of the weekly US Initial Jobless Claims and the quarterly readings of Nonfarm Productivity, as well as the Unit Labor Costs for the second quarter (Q2) will decorate the calendar and should also be important to watch for clear directions. Furthermore, there are multiple Fed officials scheduled to deliver speeches and will provide fresh impulse.

Technical analysis

USD/INR pullback remains elusive unless it stays beyond the 21-day SMA support of 82.95.