• Indian Rupee gains traction, backed by lower US Treasury bond yields, weaker USD.
• India’s Wholesale Price Index (WPI) inflation remained in the deflationary zone in October.
• Indian Trade Balance and US Producer Price Index (PPI), Retail Sales will be due on Wednesday.

Indian Rupee (INR) trades strongly on Wednesday on the decline of US Treasury bond yields. On Tuesday, India’s inflation, as measured by the Wholesale Price Index (WPI), remained in the deflationary zone for the seventh month in a row in October, coming in at -0.52% versus -0.26% prior. That being said, the overall price development in manufactured products contributed to lower wholesale inflation in October. Nonetheless, India remains vulnerable to higher crude prices as India is the world's third-biggest oil consumer.

Market participants will keep an eye on the Indian Trade Balance for October. In the meantime, the Reserve Bank of India (RBI) is likely to intervene to prevent the volatility in the national currency, which might cap the INR’s depreciation in the near term. Also, the US Producer Price Index (PPI) and Retail Sales will be released later on Wednesday.

Daily Digest Market Movers: Indian Rupee gains ground, US dollar drops on weaker US inflation data

• India's Wholesale Price Index (WPI) inflation came in at -0.52% versus -0.26% prior, below the estimations of -0.20%.
• India’s Consumer Price Index (CPI) climbed 4.87% YoY in October from the previous reading of 5.02%, above the market consensus of 4.80%.
• The Reserve Bank of India (RBI) has kept interest rates steady for four consecutive meetings and maintains a relatively hawkish policy stance to alleviate price pressures.
• RBI Governor Shaktikanta Das said India remains sensitive to food price shocks, and monetary policy continues to push inflation towards the 4% target.
• RBI forecasts India's GDP will expand at a 6.3% annual rate in the current fiscal year.
• US Consumer Price Index (CPI) grew 3.2% YoY in October from the previous reading of 3.7%, lower than the expectation of 3.3%.
• The US Core CPI, which excludes volatile food and energy prices, rose by 0.2% MoM and 4.0% YoY.
• Fed fund futures are now pricing no further US rate hikes in this cycle, according to the CME FedWatch Tool.

Technical Analysis: The Indian Rupee strengthens but the upside potential seems limited

The Indian Rupee trades firm on the day. The USD/INR pair has hovered around the lower limit of the trading range of 83.00–83.35 since late September. However, the USD/INR maintains a bullish vibe as the pair holds above the key 100- and 200-day Exponential Moving Averages (EMA) on the daily chart.

The initial support level for the pair is located near a low of September 12 at 82.82. Any follow-through selling will see losses extend to a low of September 22 at 82.75, followed by a low of August 4 at 82.65.

On the upside, the immediate upside barrier will emerge near the upper boundary of the trading range of 83.35. A break above 83.35 will see a rally to a year-to-date (YTD) high of 83.47. The additional upside filter to watch is a psychological round figure at 84.00