USD/INR Forecast: Dovish RBI Signals Weigh on the INR

Tuesday’s early European session, the Indian Rupee edges lower due to dovish bets for the RBI weighing on the USD/INR, however, the multi-phase US-China trade deal might cap the INR losses.

According to the data released for the consumer inflation in India, which fell more than expected, this supports bets that the Reserve Bank of India may extend its rate-cutting cycle. Additionally, the ongoing concerns about the us tariff could put pressure on the Asian currencies, including the rupee.

As India is the world’s third-largest oil consumer. The decline in oil prices may also affect the rupee and limit its losses. because the lower oil prices tend to have a positive impact on the INR.

Key Drivers for the USD/INR:

• The ongoing discussion about the India-US trade deal, which is structured in three tranches, is expected to reach an agreement before July, after Trump’s reciprocal tariffs are set, as per Bloomberg.
• The expected GDP growth for India’s economy is 6.9% in the quarter ended March 31, and at 6.3% for the financial year 2024-2025, which is lower than the expected rate by the government’s national statistics office, NSO, in February
• Moody’s downgraded the US credit rating from (Aaa) to (Aa1), because of the belief that the government does not have enough ability to decrease its national debt.

How these factors may affect the USD/INR, if the India-US trade deal is established successfully, this may enhance the trade between the trade countries and lead to higher inflows of us dollars, potentially strengthening the Rupee. But in the short term, until they reach the deal, the looming threats of the US tariff still exist and act as headwind.

On the other hand, the decision made by Moody’s may strengthen the rupee for the short term.

USD/INR Technical Analysis:

From the technical perspective, the USD/INR is now trading under the pressure of the resistance level at 85.90, having strong support from the level of 85.08, so any breakout above the 85.90 level could open the door for the pair to reach higher levels up to 86.70.

On the flip side, if the USD/INR moves downward towards the support level 85.08 and breaks down this level, the bearish scenario will be highly recommended to reach lower levels towards 84.55 and then 84.00. USD/INR Forecast for 2025, 2027, and 2030

This article was originally published on InvestingCube.com. Republishing without permission is prohibited.