USD/INR Forecast: Rupee Remains Strong Amid Rising Bond Yield
The Indian rupee is once again showing good strength against the greenback. Despite facing multiple tailwinds in the last month, the USD/INR pair has remained in a narrow range. While other global currencies are becoming weak compared to the US dollar, the rupee continues to remain resilient.
On Tuesday, the USDINR pair showed a minor decline of 0.02%. On a normal day, such minor gains would’ve remained unnoticed. However, on a day when the DXY index is up 0.1%, and the 10Y Treasury Bond yield is up 0.83%, such a minor decline shows incredible strength.
Why Is The Indian Rupee Gaining Strength?
Oil is one of the major imports of India. The country imports around 93% of its domestic oil usage. Crude oil price has slid more than 6% from its September peak. This means a reduced import bill for the Indian economy, putting less pressure on the rupee.
Another possible reason why the USD/INR hasn’t made a new yearly high since August is the interventions of the Reserve Bank of India (RBI). The Indian central bank is trying to keep the exchange rate stable to prevent inflation from rising again.
USD/INR Technical Analysis & Forecast
As visible on the chart above, the recent price action has formed a symmetrical wedge. The breakout target of this wedge is above 84. I’ve been mentioning the 84-85 level as a potential bullish target for the past few months, but the RBI continues to intervene.
USD/INR forecast depends on the direction of the breakout from the symmetrical wedge pattern. In case of an upward breakout, 82.2 is the technical price target. Currently, the price is retesting the top of the wedge for a breakout. If the DXY index extends its gains for the rest of the week, the bullish breakout will be almost imminent.