USD vs INR: Rupee breaches 92 against US dollar, Key reasons behind the fall

USD vs INR: The Indian rupee weakened further on Thursday, falling below the 92 mark against the US dollar. It touched an intraday low of 92.1260. The currency extended losses after failing to sustain gains from the previous sessions.

Dollar index steady after Fed meeting

Manoj Kumar Jain of Prithvi Finmart said, "The dollar index traded steady after Fed meeting outcomes. The dollar index was settled on slightly positive note at 96.19 with a gain of 0.02% on Wednesday. The USD-INR 25 February futures contract was also settled on positive note at 92.0300 with a gain of 0.18% on the National Stock Exchange on Wednesday."

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He added, "The dollar index traded steady on Wednesday after the U.S. Fed kept interest rates unchanged in the range of 3.50%-3.75%. The Fed Chairman said the U.S. economy in a good shape, employment is stabilized, inflation is under control, tariff driven inflation persists and could stabilize soon. He clearly said that the Fed is not having any plan for rate hikes and could lose monetary policy once tariff driven inflation is stabilized. The Federal Reserve plans to cut interest rates this year could pressurize the dollar index in the upcoming sessions."

Jain expects the dollar index to remain volatile this week amid global financial market movements, U.S. inflation data, and geo-political tensions. He said it could trade in the range of 95.20-97.70 this week.

Why the rupee fell

"On the other hand, rupee unable to hold its previous sessions gain and plunged again. A rupee hit record low despite recovery in the domestic equity markets and the India-EU FTA deals. FPI’s outflow from domestic equity markets and higher crude oil prices are pressurizing the rupee," Jain said.

He expects the rupee to remain volatile this week amid domestic market fluctuations and geopolitical tensions. According to him, the USD-INR pair could trade in the range of 90.8500-93.4000 this week.

Technical outlook

Jain said, "USDINR 25 February futures contract recovered from their lows. On the daily technical chart, a pair is trading above its moving average trend-line support level of 91.4000 and RSI is fetching above 70 levels. MACD is also showing positive crossover on the daily technical charts."

He added, "As per the daily technical chart, we observed that a pair is trading above its moving average trend-line support level of 91.4000 and RSI is fetching above 70 levels. Looking at the technical set-up, MACD is showing positive crossover and a pair is sustaining above 91.0000 levels."

Jain said support for the pair lies at 91.8500-91.6000, while resistance is placed at 92.2500-92.5500. He suggested selling in the pair below 91.8000 (only for intraday trade) with a stop loss of 92.0800 for the target of 91.4500-91.2500. The 28 January futures contract made a low of 91.5000 and expired at 91.6700.