- USDINR is on course to register the biggest daily gain in weeks, with the momentum gaining steam as the US threatens new tariffs.
The USDINR forex pair traded upwards for the second successive session, with the US dollar gaining on news of fresh trade tariff fears. The pair was up by 0.55% to trade at 85.92 at the time of writing, staying on course to register the biggest daily gain in three weeks. US President Donald Trump has caused a stir in the market after threatening a 10% tariff against BRICS trading block and its allies.
Trump said on Sunday that any country aligning itself with BRICS, faces an additional 10% tariff on its exports to the United States. The previous 90-day pause to reciprocal tariffs was to end officially on July 9, but US officials have revealed that the effective date has been pushed to August 1. India is one of the five members of BRICS, whose other signatories include Brazil, Russia, China and South Africa.
Trump’s comments brings headwinds to the rupee as it is unclear what it means for the bilateral trade negotiations that had been ongoing between the United States and India. The Trump administration will start dispatching letters to US trade partners starting Monday, informing them of the incoming trade tariff rates. That could usher a new era of tariff-related downside on the broader global economy. India’s equities markets could experience increased dollar outflows if foreign institutional investors grow cold feet.
However, the USDINR currency pair upside is limited due to a likely fall in crude oil prices. The commodity is will likely trade downwards after OPEC+ announced higher-than-expected production raise starting in August. India is the world’s third-largest importer of dollar-denominated crude oil and lower prices translates to reduced demand for the greenback.
USDINR Prediction
USDINR pivot mark is at 85.79 and the momentum calls for further upside. The pair will likely meet primary resistance at 86.00. Breaking above that level will signal a stronger momentum that could push the action higher to test 86.20.
Conversely, breaking below 85.79 will shift the momentum to the downside, with primary support likely to be at 85.64. The upside narrative will be invalid if the price breaks below that level. An extended control by the sellers could push the action lower and test 85.46.
