- The Indian Rupee trades sideways in Wednesday’s early European session.
- The renewed US Dollar demand might weigh on the local currency, while sustained Indian foreign inflows could underpin the INR.
- Fed Chair Jerome Powell’s second testimony will be in the spotlight on Wednesday.
The Indian Rupee (INR) trades on a flat note on Wednesday amid the modest rebound of the US Dollar (USD). The persistent Greenback demand from local importers might continue to limit the local currency’s gains. However, sustained Indian foreign inflows, a positive economic outlook, and the fastest macroeconomic growth among large economies might all contribute to the INR's upside.
Traders will focus on the second semi-annual testimony by Federal Reserve (Fed) Chair Jerome Powell on Wednesday. The attention will shift to the US Consumer Price Index (CPI) inflation data on Thursday. The US CPI is projected to show an increase of 3.1% YoY in June, while core inflation is projected to remain steady at 3.4% YoY. Any dovish comments from the Fed’s Powell or signs of softer inflation in the US might exert some selling pressure on the Greenback.
Daily Digest Market Movers: Indian Rupee flat lines despite India’s optimistic outlook
- The Reserve Bank of India said on Monday that the country added 46.7 million jobs in the fiscal year ended March, the highest since 1981-1982.
- India’s central bank added $5.6 billion in Gold reserves in the June quarter, with foreign currency assets increasing by $1.9 billion and the value of gold in reserves rising by $3.8 billion. As of June 28, India's foreign currency reserves were at $652 billion.
- Fed Chair Jerome Powell said in testimony Tuesday to Congress that the case for interest rate cuts is becoming stronger as the most recent inflation data showed some modest further progress.
- Powell added that "more good data" could open the door to interest rate cuts. He noted that holding interest rates too high for too long could jeopardize economic growth.
- Powell's remarks have helped push up the chance of a September rate cut by the Fed to above 75%, up from 71% before the US employment data last Friday, according to the CME's FedWatch tool.
Technical analysis: USD/INR remains in consolidative mode in the near term
The Indian Rupee trades flat on the day. The bullish bias of the USD/INR pair continues as the pair holds above the key 100-day Exponential Moving Average (EMA) on the daily chart.
In the shorter term, further consolidation looks favorable as the pair has remained stuck within a familiar trading range since March 21. Additionally, the 14-day Relative Strength Index (RSI) showed neutral momentum, hovering around the 50-midline.
Sustained upside momentum could lift USD/INR to 83.65, the upper boundary of the trading range. A break above this level could attract some buying interest to the all-time high of 83.75 en route to the 84.00 psychological barrier.
On the flip side, the 100-day EMA at 83.36 acts as an initial support level for the pair. Extended losses will expose the 83.00 round mark, followed by 82.82, a low of January 12.
US Dollar price this week
The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | 0.08% | 0.13% | -0.05% | 0.07% | 0.55% | 0.84% | 0.23% | |
| EUR | -0.08% | 0.05% | -0.13% | -0.01% | 0.46% | 0.77% | 0.16% | |
| GBP | -0.13% | -0.04% | -0.17% | -0.07% | 0.40% | 0.73% | 0.11% | |
| CAD | 0.04% | 0.12% | 0.17% | 0.10% | 0.57% | 0.89% | 0.27% | |
| AUD | -0.07% | 0.03% | 0.07% | -0.10% | 0.47% | 0.79% | 0.18% | |
| JPY | -0.54% | -0.46% | -0.41% | -0.57% | -0.46% | 0.31% | -0.30% | |
| NZD | -0.85% | -0.79% | -0.74% | -0.93% | -0.80% | -0.32% | -0.60% | |
| CHF | -0.24% | -0.17% | -0.12% | -0.29% | -0.18% | 0.30% | 0.62% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
Indian economy FAQs
The Indian economy has averaged a growth rate of 6.13% between 2006 and 2023, which makes it one of the fastest growing in the world. India’s high growth has attracted a lot of foreign investment. This includes Foreign Direct Investment (FDI) into physical projects and Foreign Indirect Investment (FII) by foreign funds into Indian financial markets. The greater the level of investment, the higher the demand for the Rupee (INR). Fluctuations in Dollar-demand from Indian importers also impact INR.
India has to import a great deal of its Oil and gasoline so the price of Oil can have a direct impact on the Rupee. Oil is mostly traded in US Dollars (USD) on international markets so if the price of Oil rises, aggregate demand for USD increases and Indian importers have to sell more Rupees to meet that demand, which is depreciative for the Rupee.
Inflation has a complex effect on the Rupee. Ultimately it indicates an increase in money supply which reduces the Rupee’s overall value. Yet if it rises above the Reserve Bank of India’s (RBI) 4% target, the RBI will raise interest rates to bring it down by reducing credit. Higher interest rates, especially real rates (the difference between interest rates and inflation) strengthen the Rupee. They make India a more profitable place for international investors to park their money. A fall in inflation can be supportive of the Rupee. At the same time lower interest rates can have a depreciatory effect on the Rupee.
India has run a trade deficit for most of its recent history, indicating its imports outweigh its exports. Since the majority of international trade takes place in US Dollars, there are times – due to seasonal demand or order glut – where the high volume of imports leads to significant US Dollar- demand. During these periods the Rupee can weaken as it is heavily sold to meet the demand for Dollars. When markets experience increased volatility, the demand for US Dollars can also shoot up with a similarly negative effect on the Rupee.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD fails to gather traction, remains below 1.1700
EUR/USD fails to gather momentum, trading below 1.1700 at the end of the week. The pair is pulled down by dwindling prospects for an EU-US trade accord, as US President Trump is expected to send a tariff letter to the European Union later today, while the continued demand for the US Dollar also keeps the risk complex under extra pressure.
Meme coins to watch as Bitcoin hits record high
Meme coins Bonk, Dogwifhat, and Floki are positioned to extend gains as the weekly recovery reaches crucial resistance levels. The meme coins gain bullish momentum on the back of Bitcoin’s (BTC) recovery run, hitting a new all-time high on Thursday.
Gold challenges two-week highs near $3,360
Gold gains upside impulse at the end of the week, trading near the $3,360 mark per troy ounce in respose to solid demand from te safe-haven space. Persistent trade uncertainty underpins the ongoing risk-off mood among investors, lending extra wings to the precious metal.
GBP/USD drops below 1.3500, flirts with three-week lows
GBP/USD continues its weekly retracement on Friday, trading at its lowest level in nearly three weeks below the 1.3500 support. The UK's poor GDP statistics drags on the British pound, while the US Dollar continues to profit from safe-haven flows, sending Cable and its risk-related peers to lower levels.
Week ahead – A storm of CPI data and China’s GDP in focus amid trade uncertainty
Dollar attracts safe haven flows amid trade anxiety. US inflation data could shake July Fed cut probability. UK, Canadian and Japanese CPI numbers also on tap. Weak Chinese growth may increase calls for more stimulus.
Best Brokers for EUR/USD Trading
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.