USD/INR recovers amid modest US Dollar bids

• Indian Rupee loses traction in Tuesday's Asian session. 
• The renewed US Dollar demand and higher oil prices weigh on the INR.
• Investors await the US JOLTs Job Openings later on Tuesday ahead of the RBI decision.  

The Indian Rupee (INR) weakens on Tuesday. The renewed US Dollar (USD) demand and a rise in crude oil prices put pressure on the local currency. Barclays Bank Plc strategists said that the INR is likely to underperform even as the USD remains under pressure. "The RBI is expected to be focused on replenishing its FX buffers while allowing its forwards book to run off," added Barclays Bank Plc strategists. 

Nonetheless, stronger GDP data from India and inflows related to the rejig of a global equity index could provide some support to the Indian currency. The US JOLTs Job Openings will be published later on Tuesday. On Friday, the Reserve Bank of India (RBI) interest rate decision and the US May employment report will be in the spotlight. The Indian central bank is anticipated to deliver a third straight 25 basis points (bps) rate cut to boost growth.

Indian Rupee edges lower on higher oil prices

• The US President Donald Trump's administration has asked its trade partners to submit their best offers by Wednesday, in order to finalize deals before July 8, per Reuters. 
• India's GDP expanded by 7.4% year-on-year in the first quarter (Q1) of 2025, up from 6.2% the previous quarter and stronger than the estimation of 6.7%.
• India is the world's fastest-growing major economy, albeit growth has slowed significantly from the 9.2% reported in fiscal year 2023-24.
• The US Manufacturing Purchasing Managers Index (PMI) eased to 48.5 in May from 48.7 in April, according to the Institute for Supply Management (ISM) on Monday. This figure came in weaker than the expectation of 49.5. 

USD/INR's bearish pressure lingers despite modest recovery

The Indian Rupee softens on the day. The USD/INR pair maintains the negative view as the price remains capped under the key 100-day Exponential Moving Average (EMA) on the daily chart. However, in the near term, further consolidation or temporary recovery cannot be ruled out, with the 14-day Relative Strength Index (RSI) hovering around the midline.

The first bearish target for USD/INR emerges in the 85.05-85.00 zone, representing the low of May 27 and the round figure. If bearish pressure kicks in, the pair could slip back toward 84.61, the low of May 12. The additional downside filter to watch is 83.85, the lower limit of the trend channel.

In the bullish case, the crucial resistance level for the pair is located in the 85.55-85.60 region, the confluence of the 100-day EMA, and the upper boundary of the trend channel. A decisive break above the mentioned level could open the door for a retest of the high of May 22 at 86.10.