• The Indian rupee deepens its decline during Tuesday’s Asian session.
• Trump’s tariff threat, foreign funds outflow and stronger dollar weigh on INR.
• US October JOLT job openings will be published on Tuesday.

The Indian rupee (INR) remains under pressure on Tuesday after weakening to a recent all-time low in the previous session. Disappointing macroeconomic data from India, continued foreign fund outflows and renewed demand for the dollar continue to weaken the local currency. US President-elect Donald Trump on Saturday threatened to impose 100% tariffs on BRICS countries if they act to weaken the US dollar (USD). This in turn may impact the INR against the US dollar.

However, the negative development for INR may be confined with routine intervention by the Reserve Bank of India (RBI). Traders will be paying attention to US JOLT job openings in October, which will be released later on Tuesday. Adriana Kugler and Austan Goolsbee from the Federal Reserve (Fed) also made statements. On Friday, the most crucial events will be the Reserve Bank of India’s (RBI) decision on interest rates and non-farm payrolls data in the US for November.

The Indian rupee is depreciating in the face of many challenges

• HSBC India’s Purchasing Managers’ Index (PMI) fell to 56.5 in November from 57.5 in October. This result was below the market consensus of 57.3.
• “India recorded a manufacturing PMI of 56.5 in November, a slight decline from the previous month but still firmly in expansionary territory. Strong, broad-based international demand, evidenced by a four-month high in recent export orders, is driving continued growth in India’s manufacturing sector,” said Pranjul Bhandari, chief India economist at HSBC.
• India’s foreign exchange reserves fell by $1.31 billion to $656.582 billion in the week ended November 22, the RBI said on Friday.
• In November, U.S. industrial production improved more than expected but continued to decline. The US ISM manufacturing PMI rose to 48.4 in November from 46.5 in October, better than estimates of 47.5.
• Fed Governor Christopher Waller said Monday he was inclined to vote to cut interest rates when Fed officials meet on Dec. 17-18, but added that data coming out before then could justify keeping rates steady.
• Atlanta Fed President Raphael Bostic said on Monday that he was undecided whether an interest rate cut would be necessary at the December meeting, adding that he would wait for more data before deciding on the next meeting. “I’m keeping my options open,” he said.

USD/INR is accelerating above an ascending channel, ready to seek recent highs

The Indian rupee is losing momentum throughout the day. The USD/INR pair maintains a powerful bullish trend on the daily chart with the price holding above the key 100-day exponential moving average (EMA). Nevertheless, the 14-day Relative Strength Index (RSI) is trading above the midline near 75.15, indicating an overbought condition for the RSI. This suggests that further consolidation cannot be ruled out before positioning for a short-term USD/INR appreciation.

The psychological level of 85.00 seems to be a challenging nut to crack for the bulls. Sustained trading above the mentioned level could attract enough bullish demand to expose 85.50.

On the other hand, rejection by the resistance-turned-support at 84.55 could push the pair down to 84.22, the November 25 low. The next support level appears at 83.98, the 100-day EMA.