USD/INR edges lower on weak US data, lower oil prices

• Indian Rupee trades in positive territory in Thursday’s Asian session. 
• Concerns over mounting economic and political uncertainty in the US economy weigh on the US Dollar.
• The US Balance of Trade and weekly Initial Jobless Claims are due later on Thursday.

The Indian Rupee (INR) recovers on Thursday, snapping the two-day losing streak. Concerns over US President Donald Trump’s erratic tariff policy and a ballooning fiscal deficit after the House of Representatives passed a sweeping tax cut and spending bill drag the Greenback lower and provide some support to the local currency. 

Nonetheless, the renewed US Dollar (USD) demand from foreign banks and oil companies could exert some selling pressure on the Indian currency. Additionally, foreign equity outflows and squaring of offshore non-deliverable forwards (NDF) positions ahead of the Reserve Bank of India’s (RBI) monetary policy review on Friday could also undermine the INR. 

Investors will keep an eye on the US Balance of Trade and the weekly Initial Jobless Claims, which will be published later on Thursday. The RBI interest rate decision will take center stage on Friday. The Indian central bank is anticipated to deliver a third straight 25 basis points (bps) rate cut at its June meeting. On the US docket, the US May employment report will be closely monitored. The US Nonfarm Payrolls (NFP) is expected to show job growth of 130K in May, while the Unemployment Rate is projected to remain steady at 4.2% in the same report period.

Indian Rupee strengths ahead of the India/US key events

• According to a Reuters poll of foreign currency strategists, the Indian rupee is likely to make small gains this year, underperforming the majority of its Asian counterparts as the US Dollar retreats. 
• The INR has barely made any advances against the USD this year, placing it among the worst performers in Asia. It has not received much support from reports of unexpectedly strong growth in the last quarter. 
• India’s HSBC Composite Purchasing Managers Index (PMI) eased to 59.3 in May from 61.2 in April. Meanwhile, the Services PMI dropped to 58.8 in May. This reading came in lower than the previous reading and the expectation of 61.2.  
• “India registered a 58.8 services PMI in May 2025, broadly in line with the steady readings from recent months. Strong international demand continued to fuel services activity, as evidenced by the new export business index’s uptick from April,” said Pranjul Bhandari, Chief India Economist at HSBC.
• The US Services PMI declined to 49.9 versus 51.6 prior, according to the Institute for Supply Management (ISM) on Wednesday. This reading came in below the market consensus of 52.0.
• US ADP private sector employment rose 37,000 in May, compared to a 60,000 increase (revised from 62,000) recorded in April, missing the market expectation of 115,000.
• Minneapolis Fed President Neel Kashkari said late Wednesday that the labour market is showing some signs of slowing down. Kashkari added that the central bank must stay in wait-and-see mode to assess how the economy responds to the uncertainty.

USD/INR resumes its upside above the key 100-day EMA

The Indian Rupee trades on a stronger note on the day. The USD/INR pair resumes its upside, with the price crossing above the key 100-day Exponential Moving Average (EMA) on the daily timeframe. Furthermore, the 14-day Relative Strength Index (RSI) stands above the midline near 57.60, suggesting bullish vibes stay in play in the near term. 

The immediate resistance level for USD/INR is seen at 86.00, representing the psychological level and the high of June 4. Sustained trading above this level could pave the way to 86.71, the high of April 9, en route to 87.30, the high of March 12. 

In the bearish event, the first support level is located at 85.30, the low of June 3. A break below the mentioned level could allow the downtrend to resume to 85.04, the low of May 27. The additional downside filter to watch is 84.61, the low of May 12.

Register a Revolut Business Account