Rupee Rallies on Suspected RBI Support as Structural Headwinds Linger

Key Moments

The Indian Rupee strengthened on suspected RBI intervention, although broader bearish pressures persist.
Markets continue to price around 62 basis points of Fed easing by year-end after soft NFP and CPI data.
Renewed tariff threats toward India and key U.S. labor data are likely to drive USDINR volatility.

Fundamental Overview

US Dollar: Trading Sideways Ahead of NFP

The US dollar has traded in a narrow range over recent sessions as traders wait for Friday’s NFP report. Earlier, a weaker ISM Manufacturing PMI pressured the greenback. However, those losses quickly reversed.

From a broader macro view, conditions have changed little over the past two weeks. Both NFP and CPI surprised to the downside. As a result, markets still price about 62 basis points of rate cuts by year-end.

That said, investors treated December data with caution due to shutdown distortions. Therefore, upcoming releases should offer clearer signals. Current pricing suggests the Fed could deliver its first cut in March at the earliest.

If data remains soft, traders may increase expectations for deeper easing in 2026. In that case, the dollar would likely face renewed pressure. Conversely, stronger figures could force markets to scale back rate-cut bets and support the greenback.

Indian Rupee: Intervention Support vs Structural Weakness

The Indian Rupee strengthened after what appeared to be intervention by the Reserve Bank of India. Recently, the central bank has played a more active role in currency markets.

However, despite this support, structural headwinds remain. As a result, the broader bias for the Rupee stays cautious.

Trade tensions add another layer of risk. On Monday, Trump threatened fresh tariffs on India over its stance on Russian oil. That warning reinforced the negative backdrop for the currency.

USDINR Technical Picture

Timeframe	Key Levels	Bias
Daily	Resistance: 90.40 \| Support: 89.70, 88.90	Upside structure intact within rising channel
4-hour	Support: 89.70 \| Targets: 92.00, 88.90	Buyers eye dips; sellers watch for channel break
1-hour	Support: 89.70 \| Focus: channel base	Short-term traders assess dips versus breakdown

USDINR – Daily Timeframe

On the daily chart, USDINR failed to extend gains toward 90.40 after suspected RBI action pushed the pair lower. Even so, the broader bullish structure remains intact.

Buyers may return near the 89.70 area, which aligns with channel support. Meanwhile, sellers need a clear break below the channel to target further downside. The next key level sits near 88.90.

USDINR – 4-Hour Timeframe

The 4-hour chart shows a sharp drop following suspected intervention. Once again, the 89.70 zone stands out as key support.

Buyers may look for entries near this level, with risk defined below the channel. On the upside, a rebound could target the 92.00 handle. In contrast, bears will wait for a clean channel break to aim for 88.90.

USDINR – 1-Hour Timeframe

The 1-hour chart adds little beyond the broader setup. Short-term buyers still favor dips near 89.70 and the channel base. Meanwhile, sellers remain focused on a downside breakout to seek fresh lows.