USD/INR strengthens ahead of Indian PMI data

• The Indian Rupee gathers strength in Monday's Asian session. 
• The weaker USD amid the uncertainty surrounding the US election outcome supports the INR. 
• The HSBC India Manufacturing PMI is due later on Monday. 

The Indian Rupee (INR) edges higher on Monday on the decline in the US Dollar (USD) amid the likely unwinding of long positions in the lead-up to the US presidential election. However, the sustained foreign outflows from domestic stocks and rising crude oil prices might cap the INR's upside. 

The US presidential election and the Federal Reserve's (Fed) interest rate decision will be in the spotlight this week and might trigger volatility in the market. The Federal Reserve is widely anticipated to cut rates by 25 basis points (bps) at its November meeting on Thursday. On the Indian docket, the HSBC Manufacturing Purchasing Managers' Index (PMI) will be released on Monday. 

Daily Digest Market Movers: Indian Rupee rebounds ahead of looming US presidential election  

• According to a Reuters poll, the Indian rupee will trade in a tight range around current levels against the dollar over the coming year as the Reserve Bank of India (RBI) routinely dips into its FX reserves to manage the currency's stability.
• "The (FX) intervention has been an ongoing affair and it's not just this year, it's been continuing post-COVID so we would expect two-sided interventions to continue," noted Vivek Kumar, an economist at QuantEco Research.
• The Nonfarm Payrolls (NFP) in the US rose by 12K in October, following the 223K increase (revised from 254K) seen in September, the US Bureau of Labor Statistics (BLS) showed Friday. The figure was weaker than the market expectations of 113K by a wide margin. 
• The Unemployment Rate held steady at 4.1% in October, in line with the consensus.
• "It is widely considered that a Trump win will be positive for the USD, though many feel this outcome has been discounted," noted Chris Weston, an analyst at broker Pepperstone. 

Technical Analysis: USD/INR's positive view remains in play in the longer term

The Indian Rupee trades weaker on the day. However, the bullish outlook of the USD/INR pair remains intact, with the price holding above the key 100-day Exponential Moving Average (EMA). The upward momentum is reinforced by the 14-day Relative Strength Index (RSI), which stands above the midline near 57.70.

The first upside barrier for USD/INR emerges at the upper boundary of the ascending trend channel of 84.24. Extended gains break above this level could draw in enough buying demand to 84.50, en route to the 85.00 psychological level. 

On the downside, a decisive close below the lower limit of the trend channel near 84.05 could pave the way to 83.78, the 100-day EMA.