USD/INR has been trading sideways for the past few days. The volatility has significantly decreased in the US Dollar to Indian Rupee exchange rate. However, the latest analysis suggests there could be slightly more downside for the Rupee in the coming days.
On Tuesday, USD/INR remained sideways despite weakness in the US dollar. At press time, the pair was showing minor gains of 0.03%. The pair is currently trading 1.2% below its yearly high. While the RBI’s interventions have kept the Rupee stable against the US dollar, the longer-term outlook remains bearish.
RBI Intervention Decreases Volatility in USD/INR
Due to the soaring USD/INR at the start of this year, the Reserve Bank of India (RBI) has stepped in to stabilize the exchange rate. Since then, the two-way intervention by the central bank has decreased the volatility in the pair, which was on its way to appreciating even more.
Due to a good balance of payments in 2023, Indian Rupee is likely to show strength in terms of the greenback. However, if the US Federal Reserve keeps the interest rates elevated for a long time, DXY may have a strong rebound. This may send the USD/INR pair soaring.
USD/INR Eyes More Downisde After Sideways Movement
The USDINR chart reveals that the pair has broken below the ascending triangle pattern and now consolidating just a few points above the 81.65 support level. I expect the price to retest this level in the coming days. A weakness in the DXY index may act as a catalyst for this move.
USD/INR forecast will remain bearish as long as the pair remains below 83 level. This resistance has been tested multiple times since the start of the year and resulted in a rejection each time. From a fundamental point of view, Indian Rupee has emerged as a strong currency and a potential threat to the hegemony of the US dollar.
In the meantime, I’ll keep sharing the updated USDINR forecast and my personal trades on Twitter, where you are welcome to follow me.