USDINR Rises Again, And Volatility Is About to Spike

The US dollar registered gains against the Indian rupee for the second session in a row on Monday, with the USDINR currency pair closing at 83.61 after gaining nearly 0.2%. The uptick was primarily driven by a blend of importer demand, trade tariff fears and gains by crude oil price. The two currencies have been on a push-pull action in recent days, amid souring trade relations between India and the United States.

US President Donald Trump last week threatened to impose an additional 25% tariff on Indian goods, using the measure to put pressure on India to abandon its purchase of Russian crude oil. That has provided support to USDINR as pressure mounts on the rupee. However, Trump is scheduled to meet Russian President Vladmir Putin on this week on Friday and a breakthrough in the talks could help the rupee recover some of the lost ground.

Meanwhile, oil prices rose for the first time in six sessions on Monday, adding propulsion to USDINR. India is the world’s third-largest importer of crude oil and rising prices typically put pressure on the rupee. That has also been compounded by Indian importer demand for the US dollar as importers rush to secure the green back for their mid-month trade settlements.

USDINR Prediction

The USDINR pair pivots at 87.52 and the momentum signals the likely continuation of the upside action above that level. The first resistance will likely come at 87.74. Breaking above that level will signal a stronger momentum that could extend gains and test 88.00.

Conversely, going below 87.52 will shift the momentum to the downside. With that USDINR could find the first support at 87.31. The upside narrative will be invalid below that level. In addition, an extended control by the sellers could result in a stronger downside momentum that could push the pair to test the second support at 87.15.

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