USD/INR loses ground amid softer Dollar, eyes on Middle East conflict

• Indian Rupee holds positive ground despite the sour market mood.
• Rising oil prices and Middle East geopolitical concerns might trigger risk-off sentiment and limit the Indian Rupee's upside.
• Market players await the US S&P Global PMI data on Tuesday; India’s markets are closed for the Dussehra holidays.

Indian Rupee (INR) trades strongly against the US Dollar (USD) amid a decline in US Treasury bond yields on Tuesday. Moreover, the Reserve Bank of India's (RBI) potential aggressive intervention last week lends some support to the Indian Rupee and acts as a headwind for the USD/INR pair. Nonetheless, the higher crude oil prices and escalating geopolitical tension in the Middle East might contribute to the risk-off mood and cap the upside of the Indian Rupee.

India’s markets are closed on Tuesday on account of the Dussehra holidays. Traders will monitor India's Balance of Payments for the second quarter (Q2) on Thursday. Fed officials will not deliver any speeches this week due to the blackout period ahead of the FOMC meeting next week. In the meantime, traders will take cues from the US S&P Global PMI, the preliminary estimate of the US Q3 Gross Domestic Product (GDP), and the Core Personal Consumption Expenditure Index due later this week.

Daily Digest Market Movers: Indian Rupee soars as the Dollar corrects to one-month lows

• The Chicago Fed National Activity Index rose to +0.02 in September versus -0.22 prior, suggesting the US economy is still some distance from a recession.
• RBI's monetary policy committee stated the central bank would continue to focus on maintaining inflation at the target of 4%.
• MPC member Varma stated that a 1% real interest rate, adjusted for inflation, would consistently achieve India's inflation target.
• Net foreign direct investment (FDI) in India fell to $2.99B in April–August this year from $18.03B last year, reflecting a slowing in global activity and a rise in repatriation.
• RBI Chief Shaktikanta Das said the central bank does intervene in the FX market, but only to prevent excessive volatility in the INR.
• Chief Das stated that RBI will monitor the evolving inflation dynamic amid the uncertainty surrounding food inflation.
• India's Finance Minister will closely monitor the supply chain impact of the ongoing tensions in the Middle East.
• The RBI's October bulletin suggested growth in India is expected to gain momentum for the remainder of the year.
• RBI sold a net total of $3.86B in the spot foreign exchange market in August, as per their monthly bulletin.
• India’s Wholesale Price Index (WPI) arrived at -0.26% YoY in September from 0.52% in August, below the market consensus of 0.50%.

Technical Analysis: Indian Rupee trades firmly above the key support level of 83.00

The Indian Rupee extends its upside against the USD. The USD/INR pair remains well supported above the 83.00 psychological mark despite breaking the low of a prior range. A break below the 83.00 would drag the pair to 82.82 (low of September 12), en route to 82.65 (low of August 4). On the other hand, the immediate upside barrier is the  support-turned-resistance at 83.15, followed by a high of October 4 at 83.30, and the all-time high around 83.45. In the meantime, the pair holds above the key 200-day Exponential Moving Average (EMA) on the daily chart, which supports further upside for the USD/INR pair in the short term.