USD/INR rises ahead of India's second quarter GDP and U.S. PCE inflation data.

• The Indian Rupee falls near 87.90 against the Dollar due to multiple pressures.
• U.S. tariffs and the exit of foreign investors continue to weigh on the Rupee.
• The market is awaiting the data on Indian GDP and US PCE inflation.

The Indian Rupee (INR) opens weak against the US Dollar (USD) this Friday. The USD/INR pair jumps to nearly 87.90 as the high tariffs imposed by the United States on Indian imports and the constant outflow of foreign funds from the Indian stock market continue to heavily pressure the currency.

Earlier this week, Washington confirmed additional tariffs of 25% against India for purchasing Russian oil, raising the total tariff to 50%, a measure that has weakened the competitiveness of Indian products in the global market.

The monthly bulletin published by the Reserve Bank of India (RBI) on Thursday also showed that U.S. tariffs pose short-term economic risks. However, domestic consumption remains resilient, with strong demand coming from rural areas.

Meanwhile, foreign institutional investors continued selling in Indian equity markets for the fourth consecutive day on Thursday, reducing holdings worth 3,856.51 crores. So far in August, they have withdrawn 38,590.26 crores.

In Friday's session, investors will focus on the second quarter GDP data to be released at 10:30 GMT. The Indian economy is expected to have grown at a moderate annualized rate of 6.6%, down from the previous 7.4%.

Factors that move the market: The Rupee weakens against the Dollar

• A slight bullish movement in the US Dollar before the release of the Personal Consumption Expenditures Price Index (PCE) for July has strengthened the USD/INR pair.
• The Dollar Index (DXY), which tracks the value of the greenback against six major currencies, is trading 0.1% higher, around 98.00.
• Investors will pay special attention to the U.S. PCE inflation data, as it will influence expectations about the Federal Reserve's monetary policy. Economists expect that core PCE inflation, the Fed's preferred measure, has increased at a faster rate of 2.9% year-on-year compared to 2.8% in June.
• According to the CME FedWatch tool, there is an 85% chance that the Fed will cut interest rates by 25 basis points at the September meeting.
• On Thursday, Federal Governor Christopher Waller explicitly announced that he would support a 25 basis point rate cut next month, adding that there would be more cuts in the next three to six months. “The time has come to move policy towards a more neutral stance,” he said.
• Meanwhile, Governor Lisa Cook filed a lawsuit for her dismissal by President Trump due to mortgage allegations, which could undermine the credibility of the White House.

Technical Analysis: USD/INR rises near 87.90

The USD/INR pair jumps near 87.90 this Friday. The short-term trend remains bullish as it stays above the 20-day Exponential Moving Average, which is trading near 87.50.

The 14-day Relative Strength Index (RSI) rises above 60.00. A new bullish momentum could arise if the RSI remains above that level.

Looking down, the minimum of July 28 around 86.55 will act as a key support. On the bullish side, the maximum of August 5 around 88.25 will be a critical hurdle for the pair.

I am not surprised by this weakness of the rupee. With Trump threatening more tariffs and foreign investors fleeing the Indian market, who would want to hold positions in this currency right now? If the GDP disappoints today, we could see an even sharper decline.