- Summary:
- USD/INR technical analysis with the key factors affecting its exchange rate including the fundamental drivers have to be considered.
As we started today on May 7, 2025, with this news that India launched what it called “Operation Sindoor,” conducting missile strikes targeting what they claimed were terrorist infrastructure. Pakistan strongly condemned the strikes, calling them an act of war. This flaring up of the geopolitical issues affecting the pricing of the indian rupee led to volatility in the currency pair of USDINR. So, in this article, let’s see the technical analysis, price prediction for the USD/INR, as well as other fundamental factors that may also affect the exchange rate.
USDINR Technical levels
Typically, increased geopolitical tensions weakened the rupee, led the pair to gain ground, and it hovered around 84.50 on Wednesday. On the daily chart, technical analysis recommends the continued bearish outlook because the pair is still within a descending channel pattern.
According to the downside scenario, on the lower frontier of the descending channel, at approximately 84.08 is a support level. And any clear break below this level could move downward and potentially to the level of 83.75, which is its eight-month low.
On the other side, the upside scenario can be accomplished if the pair can break out the resistance level at 84.70. A sustained break above this level could boost short-term bullish momentum and go up to reach 85.17, which is another resistance level; breaking it can bull the pair to its two-month high of 86.72
USDINR Fundamental Drivers: The US Dollar remains stronger, awaiting for Fed Policy
The US Federal Reserve Policy:
The market is still focused on the Federal Reserve’s policy decision expected later in the North American Session, and is widely expected to keep interest rates unchanged. particularly amid tariff-related uncertainty and pressure from President Donald Trump for rate cuts. The Fed’s stance on interest rates and the upcoming economic outlook will continue to be the main driver for the USD in the broader market, which will affect the volatility of USD/INR.
The Geopolitical Tensions:
As we mentioned above that the main event today affecting the pricing of USD/INR is what happened between India and Pakistan. This increases risk aversion and typically strengthens the us dollar (safe-haven demand) and weakens the rupee
Republic Bank of India Intervention:
Consequently to the geopolitical tensions and weakening rupee, the market sentiment is anticipating a potential intervention from the RBI to support the currency, therefore, any intervention can influence the USDINR rate.
While there are already declines in the yields, which are driven by the expectations of more rate cuts, the RBI maintains surplus liquidity.
Crude Oil Prices:
In light of that, India is a major oil importer, price of crude oil remains a crucial factor for India (Oil Price Edges Up On Weak Dollar). because any significant movements in oil prices can affect the USD demand and support the INR as well.