The USD/INR exchange rate appears to be in a tailspin as the dollar keeps weakening in terms of major global currencies. The Indian Rupee has gained more than 1.5% strength when compared to the US dollar within the past four weeks. The pair is currently trading close to its two-month lows.
The USDINR pair is showing minor gains on Monday as the DXY index is showing weakness once again. Till the start of the London session, the pair was trading at 81.875 after rising by 0.10% during the first trading session of the week.
Indian Rupee Faces Headwinds As Oil Prices Surge
The recent production cuts by OPEC+ have sent oil prices soaring above $82. This has increased the import bills of the Indian economy and hence has become a major headwind for the local currency. The falling DXY Index has offset this effect to a major extent, but if oil prices surge to $100 once again, USD/INR might get a strong rebound.
The recent pause in rate hikes by the Reserve Bank of India was expected to be a tailwind for the US dollar to the Indian Rupee exchange rate. However, the massive drop in the dollar strength index to its 12-month lows gave the Indian Rupee much-needed support. After the March CPI report, all eyes are on the next FOMC meeting.
USD/INR Breaks Longterm Uptrend
The USD/INR reveals a breakdown from the uptrend for the first time since August 2022. The pair has close the week below the trendline, suggesting that the bears are gaining momentum. If the pair doesn’t break back above the trendline this week, the bears can target the YTD lows of 80.89.
Before tagging the yearly lows, there is also a possibility of a rebound from the 200-day moving average, which currently lies at 81.45. If DXY Index rebounds from its current lows, the Indian Rupee will tumble against the US dollar once again. Therefore, a close eye must be kept on the dollar strength index if you are trading Indian Rupee.
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