The Indian Rupee has stabilized against the US Dollar, currently at around 88.70, after experiencing some losses. The Reserve Bank of India is stepping in to prevent the Rupee from reaching its all-time low of 88.87. Traders are closely watching India’s Consumer Price Index (CPI) data, with inflation expected to decrease to 1.7%, which might influence monetary policy. Recently, the Rupee has gained from positive sentiments around India-US trade talks and steady foreign investment. The US Dollar Index is relatively low, at 98.90, partly due to concerns about a US government shutdown. Additionally, the preliminary University of Michigan Consumer Sentiment Index fell slightly to 55.0 for October.

USD INR Technical Analysis

The USD/INR pairing testing the nine-day Exponential Moving Average at 88.70 points to a potential upward trend. If it rises above 88.87, it may head towards 89.50. However, slipping below 88.70 could push it down to 88.51. India’s economy, which has grown an average of 6.13% since 2006, continues to attract significant foreign investment. Changes in oil prices and inflation also affect the Rupee’s strength, thereby impacting trade balances and monetary policy. India’s trade deficit often drives demand for the US Dollar, putting more pressure on the Rupee. Increased volatility and high import volumes can weaken the currency. A legal disclaimer at the end of the article highlights the need for thorough research before making any investment decisions. We observe the USD/INR pair holding steady around 88.70, providing immediate support. The Reserve Bank of India is actively working to protect the Rupee from falling to its lowest point of 88.87, which was hit last month. This creates a careful scenario for traders, as the central bank’s measures counterbalance the market’s underlying pressures. The upcoming Indian CPI data for September is crucial, with expectations for a low inflation rate of 1.7%. This figure is significantly below the RBI’s target range and could lead to interest rate cuts. As a result, we should prepare for a potentially weaker Rupee, as lower rates would make the currency less attractive to foreign investors. Foreign institutional investors have been net buyers of Indian equities since early October, providing support for the Rupee. However, these flows can quickly change, as seen with fluctuations earlier in 2024. Additionally, the widening trade deficit, reported to be over $25 billion in August 2025, continues to strengthen demand for US dollars.

US Dollar Challenges

On the other side, the US Dollar is encountering significant challenges. The ongoing US government shutdown has caused uncertainty and payment delays, historically weakening the dollar during similar situations in 2018-2019. This political instability raises expectations for aggressive monetary easing from the Federal Reserve. Current market expectations, as seen in the CME FedWatch Tool, indicate a high probability of a Federal Reserve rate cut this month, with another likely in December. This dovish outlook from the central bank is weighing heavily on the dollar index (DXY). As a result, any strength in the USD/INR pair may reflect Rupee weakness rather than a strong US Dollar. Due to these competing factors, monitoring the 88.70 support level is essential. If the pairing falls below this mark, possibly due to a resolution of the US shutdown, it could test the monthly low of 88.51. Conversely, weak inflation data from India could lead the pair to revisit the record high of 88.87. The price of oil is another important factor to keep an eye on. With Brent crude prices rising over 8% in the last quarter above $95 per barrel, India’s import costs are increasing. This situation consistently puts pressure on the Rupee and could drive the USD/INR higher, regardless of other influences. Create your live VT Markets account and start trading now.

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