Key Moments
- The US dollar has moved largely sideways as markets price in 60 bps of rate cuts by year-end following recent US NFP and CPI data.
- The Indian Rupee has gained support from a US-India trade deal and President Trump’s move to reduce tariffs from 25% to 18%.
- USDINR is consolidating near the lower end of its channel, with key technical levels in focus ahead of US data and a possible Supreme Court decision on tariffs.
Fundamental Overview – US Dollar
The US Dollar has been trading in a largely sideways pattern following a strong US Nonfarm Payrolls report and slightly weaker US CPI data from last week. Despite the mixed signals, markets have increased expectations for monetary easing, with 60 bps of rate cuts anticipated by year-end. Overall, however, the recent releases have not materially altered the broader macro picture for the currency.
Bearish positioning in the US Dollar remains crowded, making it difficult to foresee substantial additional downside unless incoming data weakens sharply or the US economy experiences a notable negative shock. Key macro inputs this week are concentrated on Friday, when markets will receive US Flash PMIs and the US Q4 GDP report. There is also the possibility that the US Supreme Court will issue a decision on tariffs introduced by President Trump.
Fundamental Overview – Indian Rupee
The Indian Rupee continues to trade within a structurally bearish trend against the US Dollar, but it has recently benefited from supportive developments on tariffs and inflation. The US and India have concluded a trade agreement, and President Trump has announced that tariffs will be reduced from 25% to 18%, offering some relief for the currency.
The Reserve Bank of India left interest rates unchanged at its most recent policy meeting. Subsequently, inflation rose to 2.75% in January from 1.33% in December. With inflation now within the 2-6% tolerance band around the 4% target, expectations for near-term rate cuts have been pushed aside.
If the US Supreme Court rules against Trump’s tariffs, the Indian Rupee could stage another strong rally. Conversely, if the Court upholds the tariffs, market dynamics are expected to remain broadly unchanged, as participants have already adjusted to the existing tariff structure.
USDINR Technical Picture – Daily Chart
On the daily timeframe, USDINR is consolidating near the lower boundary of its prevailing channel. Dip-buyers continue to emerge, positioning for a potential move toward the channel’s upper boundary around the 93.00 area. Sellers, by contrast, are focused on a downside break that could pave the way for fresh lows, with 89.50 identified as the initial downside target.
USDINR Technical Picture – 4-Hour Chart
The 4-hour chart shows that USDINR recently broke above a downward trendline but failed to push through a significant resistance zone near 91.00. Buyers are looking for a clear breakout above this resistance to reinforce bullish momentum toward the upper end of the channel. Sellers are expected to continue defending the 91.00 region, using a tight risk level above it and aiming for a move below the channel’s lower boundary.
USDINR Technical Picture – 1-Hour Chart
On the 1-hour chart, the structure essentially mirrors the shorter-term battle between bulls and bears visible on higher timeframes. Sellers are likely to keep fading rallies into resistance, while buyers will watch for a confirmed break higher to add to bullish positions targeting new highs within the channel.
Key Technical Levels for USDINR
| Timeframe | Key Level / Zone | Bias / Implication |
|---|---|---|
| Daily | Upper channel area around 93.00 | Upside objective for dip-buyers if consolidation resolves higher |
| Daily | 89.50 | First bearish target if price breaks below lower channel boundary |
| 4-hour | Resistance near 91.00 | Key inflection point; buyers need a breakout, sellers defending this zone |
Upcoming Market Catalysts
Several notable events are scheduled over the coming days that could influence USD and USDINR price action:
- Today: FOMC Meeting Minutes
- Tomorrow: Latest US Jobless Claims figures
- Friday: US Q4 GDP, US PCE price index for December, US Flash PMIs, and a potential US Supreme Court decision on Trump’s tariffs
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