USD/INR trades firmly as inflation in India cools down again

• India’s CPI data, risk-off market mood reduces the Indian rupee against the US dollar.
• Trump announced 30% tariff on imports from the European Union and Mexico.
• Investors wait for US CPI data for June.

Indian rupee (INR) declines against US Dollar (USD) at the beginning of the week USD/INR 86.15 has more pair. The pair is strong as the Indian currency underporform, after the soft consumer price index (CPI) and the Wholesale Price Index (WPI) for June (WPI) a stunning decline in inflation figures, a major indicator that measures inflation at the manufacturer level.

The Indian Statistics and Program Implementation Ministry has reported that the headline inflation increased at a moderate speed of 2.1% on the year, compared to an increase of 2.5% and 2.82% in May. This is the fifth straightforward month when the headline CPI remains less than the RBI’s 3.7% target for the current financial year, which was set in the June policy meeting after the advance-loading interest rate cut.

Meanwhile, the WPI report showed that inflation at the manufacturer level surprisingly recorded a decline of 0.13% on the year. Economists expected that WPI inflation increased at a faster speed of 0.52% compared to an increase of 0.39% in May. According to the report, low food and energy prices contributed significantly to the decline in WPI inflation.

Soft consumer and WPI inflation data is expected to promote market expectations that Reserve Bank of India (RBI) will cut interest Rate Next month again in the policy meeting.

Daily digest market mover

• Indian rupees trade less than the US dollar as later, after the announcement of high import duties, increases its opposite amid increasing demand for safe-hevan assets. United States (US) President Donald Trump on leading business partners, European Union (EU) and Mexico.
• At the time of writing, US dollar index (DXY), which tracks the value of greenback against six major currencies, trades firmly near 98.00, the highest level seen in two weeks.
• In the weekend, US President Trump re -awakened global trade gitlers after sending letters to the European Union (EU) and Mexico, Dictation of 30% tariffs that will be different from the sectoral levy and warns that any retaliation will be completed by proceeding in import duties.,
• The announcement has led to a sharp decline in risky property. The US equity futures have increased Friday’s loss, and risks, such as Indian rupees, are underperforming, performing a risk-circulation market mood.
• Last week, US President Trump announced 25% tariff on Japan and 35% in Canada, as well as 50% on copper imports.
• On the domestic front, investors will also focus on CPI data for June, which will be released on Tuesday. The CPI report is expected to show that the price pressure increased at a rapid pace, a landscape that will discourage the Federal Reserve (Fed) officials from cutting interest rates at the September meeting. According to the CME Fedwatch Tool, 62.8% is likely to reduce the interest rates in September.
• Meanwhile, the uncertainty around the trade deal between the US and India has placed the Indian rupee on the back leg. US President Trump has said many times that Washington is close to a trade treaty with India, but has not officially announced.
• However, a report from Bloomberg over the weekend has promoted investors’ confidence that the US and India are close to a trade agreement, as it was said that the South-Asian nation is not expected to get a tariff demand letter.
• Bloomberg’s report also states that Trump will impose less than 20% tariffs on India. Such a scenario will put the nation in a favorable position against economies such as Vietnam and Bangladesh, who have been slapped with high tariffs. Given that India with Vietnam and Bangladesh is a major exporter of clothes and apparel for the US, implementing low tariffs to India will be a competitive advantage for Indian textile exporters.

Technical Analysis: USD/INR 20-day EMA stays above EMA

The USD/INR pair again sees again at a high level of about two weeks of about 86.15 on Monday. Near period Outlook This pair is rapid as 20-day exponent moving average (EMA)

The 14-day relative power index (RSI) oscillates within 40.00-60.00 range, suggests that the property lacks speed on both sides.

Looking down, the bottom of 27 May 85.10 will serve as a significant support for the lead. On the contrary, there will be a significant hurdle for a low pair at 86.42 on 24 June.