USD/INR Rebounds as US Dollar Sees Slight Increase in Demand

• Indian Rupee Faces Downward Pressure in Tuesday’s Asian Trading Session.
• Increased Demand for US Dollar and Rising Oil Prices Impact INR Negatively.
• Market Participants Anticipate US JOLTs Job Openings and Upcoming RBI Policy Decision.

The Indian Rupee (INR) experienced a decline on Tuesday as higher demand for the US Dollar (USD) and increased crude oil prices exerted downward pressure on the currency. According to strategists at Barclays Bank Plc, the INR is expected to underperform despite the USD facing its own set of challenges. “The RBI is likely to prioritize the replenishment of its foreign exchange reserves while managing the runoff of its forwards book,” Barclays Bank Plc strategists explained.

However, positive GDP data from India and capital inflows associated with adjustments in a major global equity index might offer some support to the INR. The US JOLTs Job Openings data is set to be released later on Tuesday. Additionally, the focus will soon turn to the Reserve Bank of India’s (RBI) interest rate decision and the US employment report for May, both scheduled for Friday. The RBI is expected to cut interest rates by 25 basis points for the third consecutive time to stimulate growth.

Indian Rupee Trends Lower Amidst Elevated Oil Prices

• As part of ongoing trade negotiations, the Trump administration has requested its trading partners to present their final offers by Wednesday, ahead of a deadline on July 8, as reported by Reuters.
• India’s GDP saw a robust growth of 7.4% year-on-year in the first quarter of 2025, an increase from 6.2% in the previous quarter and surpassing the forecast of 6.7%.
• Despite being the fastest-growing major economy in the world, India’s economic growth has decelerated from the 9.2% recorded in the fiscal year 2023-24.
• The US Manufacturing Purchasing Managers Index (PMI) for May dropped slightly to 48.5 from 48.7 in April, as per the Institute for Supply Management (ISM), falling short of the expected 49.5.

USD/INR Continues to Face Downward Pressure Despite Some Recovery Signs

On the trading front, the Indian Rupee softened. The USD/INR pair remains under bearish influence as it struggles to surpass the key 100-day Exponential Moving Average (EMA) on the daily chart. Although short-term stability or a slight recovery is possible, with the 14-day Relative Strength Index (RSI) near the neutral zone, further downward movement is anticipated.

The initial bearish target for USD/INR is set in the 85.05-85.00 range, marking the low of May 27 and a significant psychological level. Should bearish momentum intensify, the pair might retreat towards 84.61, the low of May 12. Another key level to monitor is 83.85, marking the lower boundary of the current trading channel.

On the upside, significant resistance is found at 85.55-85.60, where the 100-day EMA meets the upper channel limit. A decisive break above this level could pave the way for a retest of the May 22 high at 86.10.