USD/INR gains while Trump signals US-India striking deal before tariff deadline

• The Indian Rupee trades mildly lower against the US Dollar as the latter stabilizes after surprisingly upbeat US JOLTS Job Openings data.
• Trump’s comments signaled that the US and India will finalize a trade agreement before the July 9 deadline.
• Fed’s Powell reiterates that the central bank needs more data before considering interest rate cuts.

The Indian Rupee (INR) faces selling pressure against the US Dollar (USD) during European trading hours on Wednesday. The USD/INR drops to near 85.82 as the US Dollar strives to gain ground after the release of the surprisingly upbeat US JOLTS Job Openings data for May. The data showed on Tuesday that US firms posted 7.769 million jobs, higher than 7.395 million in April.

The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, ticks up to near 96.75 during the press time. On Tuesday, the USD Index attracted bids after sliding to near 96.40, the lowest level seen since February 2022.

Meanwhile, the outlook for the Indian Rupee has improved as comments from United States (US) President Donald Trump have signaled that Washington and New Delhi are close to striking a trade deal with much less tariffs ahead of the July 9 tariff deadline.

US President Trump has also expressed confidence that lower tariffs from India will enable US companies to compete with Indian businesses, a scenario that could impact the sales of Indian manufacturers.

“I think we are going to have a deal with India. And that is going to be a different kind of a deal. It is going to be a deal where we are able to go in and compete. Right now, India does not accept anybody in. I think India is going to do that, and if they do that, we are going to have a deal for much less tariffs,” Trump said, ANI News reported.

This comes after India’s chief negotiator Rajesh Agrawal extended his stay in Washington to finalize a trade agreement before the tariff deadline, the report from ANI showed.

Daily digest market movers: Indian Rupee drops against US Dollar

• The Indian Rupee trades subduedly against the US Dollar as the latter gains temporary ground after surprisingly upbeat US Job Openings data.
• However, the outlook of the US Dollar remains weak as traders remain confident that the Federal Reserve (Fed) will reduce interest rates in the September meeting, and uncertainty surrounding the tariff deadline and fears of widening US fiscal deficit following the imposition of Trump’s so-called “big beautiful bill”.
• Meanwhile, Fed Chair Jerome Powell reiterated while speaking at a central bank gathering in Portugal on Tuesday that the central bank needs more time to learn about the impact of new economic policies on inflation and the labor market before considering monetary policy adjustments. “We’re simply taking some time, and as long as the U.S. economy is in solid shape, we think that the prudent thing to do is to wait and learn more and see what those effects might be,” Powell said, Reuters reported.
• For more cues on the monetary policy outlook, investors await the US Nonfarm Payrolls (NFP) data for June, which will be released on Thursday. Traders could raise Fed dovish bets if data points to signs of weakness in the labor market. On the contrary, upbeat job data would force traders to pare bets supporting Fed interest rate cuts in September.
• In Wednesday’s session, investors will focus on the US ADP Employment Change data for June, which will be published at 12:15 GMT. Economists expect US private employers to have hired 95K fresh workers, significantly higher than 37K in May.
• On trade discussions between the US and Japan, Washington has expressed uncertainty over striking a deal with Tokyo before the tariff deadline on July 9. “We’ve dealt with Japan. I’m not sure we’re going to make a deal. I doubt it,” Trump said while speaking to reporters on Air Force One earlier this week.
• The passage of Trump’s tax and spending cut bill to the House again for further consideration before moving to the President’s desk after clearing the Republican-controlled Senate has prompted fears of widening US debt. Economists expect Trump’s bill could increase US debt to $40 trillion over a decade, a move that would worsen the US sovereign credit rating, which was already downgraded from Aaa to Aa1 by Moody’s Rating in May.

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

The USD/INR pair oscillates inside Tuesday’s trading range around 85.75 on Wednesday. The outlook of the pair remains bearish as it stays below the 20 and 50-day Exponential Moving Averages (EMAs), which trade around 85.79 and 85.70, respectively.

The 14-day Relative Strength Index (RSI) stays below 50.00, indicating that the trend is on the downside.

Looking down, the 200-day EMA around 85.35 will act as key support for the major. On the upside, Wednesday’s high of 86.13 will be a critical hurdle for the pair.