- USD/INR holds steady near key resistance: The pair is testing the 88.80 level, with bullish momentum supported by a MACD crossover and strong technical structure on the daily chart.
- Macro and policy cues drive sentiment: Delayed US-India trade deal talks, cautious FIIs, and the Fed’s pause on further rate cuts continue to shape short-term direction.
- Outlook remains data-driven: A breakout above 88.80 could open the path to 89.00, while failure to sustain above resistance may trigger a pullback toward 88.00 or 87.61.
The USD/INR pair edged slightly higher by 0.03% in early trading. The Indian rupee weakens amid ongoing foreign institutional investor outflows. According to the exchange data, the FIIs sold equities worth Rs 6,769.34 crore on Friday.
Meanwhile, the U.S.Dollar Index rises 0.10% to 99.90. On the domestic equity market front, the Sensex rises by 74.25 points or 0.09% to 84,012.96 at the time of writing. While the Nifty 50 declines by 155.75 points or 0.60% to 25,722.10.
Last Friday, the RBI released data showing that the country’s forex reserves fell by $6.925 billion to $695.355 billion during the week ended October 24, 2025. The country’s forex reserves saw a healthy rise of $4.496 billion last week, taking the total to $702.28 billion.
Looking at a broader economy, India’s fiscal deficit hit 36.5% of its yearly target by mid-FY26, based on data from the Controller General of Accounts (CGA) on Friday. A year earlier, the fiscal deficit had reached 29% of the Budget Estimate (BE) for FY2024-25 during the same six-month period. Let’s take a technical look at the USD/INR currency pair and its key levels to watch.
The Technical Outlook for the USD/INR:
As per my last technical outlook for the USD/INR, the pair is trading close to the expected levels. Currently, at the time of writing, the USD/INR is testing the resistance level at 88.80, eyeing the 89.00 level.
The MACD shows a bullish crossover on the daily chart, indicating potential upward movement ahead. A clear daily close above the 88.80 level could pave the way toward 89.00.
On the bearish side, if the currency pair fails to break and close above 88.80, it could push the USD/INR down to retest the support level at 88.00 and then 87.61.
On the daily chart, the price action forms a cup and handle pattern, indicating a bullish continuation. The uptrend is likely to resume after the consolidation period ends. The overall uptrend for the USD/INR is set to continue.
The Two Main Factors Influencing the USD/INR:
- The US Federal Reserve Interest Rates:
Jerome Powell’s decision to rule out further rate cuts in December could strengthen the US Dollar, as it signals a more cautious Fed stance. In this case, the USD/INR pair could trend higher, with the USD gaining momentum while the Indian Rupee may weaken due to reduced expectations of additional US monetary easing. - Foreign Institutional Investors Flows:
The delay in the US-India trade deal is likely to weigh on the Indian Rupee. The foreign institutional investors may hold back or reduce their exposure to indian equities until they see a clear trade deal. This cautious sentiment could push USD/INR higher, reflecting weaker INR demand and stronger USD inflows.
When foreign institutional investors buy indian assets, they bring in dollars and convert them to rupees. This exchange process strengthens the INR. Conversely, when the FIIs withdraw their investments, demand for the USD rises, weakening the INR and pushing USD/INR higher.
India is a major oil importer. Rising crude oil prices will increase dollar demand for purchases, putting pressure on the rupee. Conversely, when oil prices drop, India’s import bill will be easier and cheaper, helping strengthen the INR against the USD.
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