- Summary:
- The USDINR trading pair looks likely to stay on the downtrend as the dollar's fundamentals continue to sour due to trade tariff fears.
USDINR traded downward in Thursday’s early hours , going at 85.48 to stay on course to register the sixth successive loss. The trading pair is down by 0.2% year-to-date and pressure is mounting on the US dollar as the trade tariff war escalates the likelihood of a recession in the United States.
The Reserve Bank of India slashed interest rates by 25 basis points last week, but that has not dented the rupee’s gains against the dollar. In addition, America’s move to suspend high tariffs for ninety days has provided reprieve for Indian exporters, and resulted in an upbeat outlook for the rupee.
Meanwhile, oil prices have been on a descending trajectory for the most part this year, with benchmark West Texas Intermediate (WTI) down by 13% year-to-date. That has subdued gains by USDINR, as India has ended up spending less dollars to import the commodity. Notably, India is the world’s third-largest importer of crude oil, and low oil prices therefore strengthen the rupee against the greenback.
Looking ahead, the Federal Reserve is expected to announce the first interest rate cut of the year in May, and that could extend the USDINR’s downside. Markets will remain closed on Friday through Monday for the Good Friday and Easter Holidays. Therefore, the absence of high-impact Indian economic data means that US Initial Jobless Claims will likely define the dollar’s trajectory in the near-term.
USDINR Prediction
USDINR will likely stay on the downtrend if its action stays below the pivot mark at 85.66. The currency pair will likely find its initial support at 85.40. However, an extended control by the sellers will break below that level and could take the action lower to test 85.22.
On the other hand, the buyers could take control if the price breaks above 85.66. That could see the first resistance encountered at 85.82. Breaking above that level will invalidate the downside narrative. In addition, such momentum could extend gains and test 86.00.
