The Indian Rupee (INR) remained largely unchanged on Thursday, holding steady amid month-end demand for the US Dollar (USD) from importers. The local currency continues to face downward pressure from capital outflows driven by uncertainty surrounding US trade tariffs. However, a potential foreign exchange intervention by the Reserve Bank of India (RBI) could help cap the INR’s decline.
Traders are closely watching the release of the US Gross Domestic Product (GDP) estimate for the fourth quarter (Q4) later today, alongside the weekly Initial Jobless Claims report. Additionally, remarks from Federal Reserve officials will be key, with Michelle Bowman, Beth Hammack, and Patrick Harker set to speak. Their comments may provide insights into the Fed’s future interest rate policies.
The INR’s performance is also influenced by ongoing factors such as foreign institutional investor (FII) sell-offs and elevated crude oil prices, which remain high amid US sanctions on Iran. These developments have placed added pressure on the Rupee, with the Dollar Index climbing to 106.65.
US President Donald Trump’s confirmation of 25% tariffs on Canadian and Mexican goods, along with the European Union (EU), has further increased market uncertainty. Additionally, data released Wednesday showed a weaker-than-expected US New Home Sales figure, falling 10.5% month-over-month to 657,000 units in January, compared to 734,000 units in December.
Comments from Federal Reserve officials, including Atlanta Fed President Raphael Bostic and Richmond Fed President Thomas Barkin, suggest that the central bank will take a cautious approach to interest rates until inflation trends back towards the 2% target.
Despite these challenges, the outlook for USD/INR remains positive, with the pair maintaining an upward bias on the daily chart. The currency pair continues to trade above its 100-day Exponential Moving Average (EMA), with the 14-day Relative Strength Index (RSI) indicating further potential for gains.
In a bullish scenario, the next target for USD/INR would be 87.25, the high from February 25. A sustained move above this level could push the pair towards an all-time high near 88.00, with the next significant resistance seen at 88.50.
On the downside, the February 21 low at 86.48 provides immediate support. A break below this level could bring the next support at 86.14 (January 27 low), followed by 85.65 (January 7 low).
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