USD vs INR: Rupee not far from record low against dollar—Key support levels to track

USD vs INR: The Indian rupee stayed under pressure on Friday and hovered near its all-time low against the US dollar. The rupee touched an intraday low of 91.88 and traded close to the record low of 91.99. At around 1:38 pm, the USD-INR pair was trading at 91.6580.

Why the rupee is weak?

The rupee remains under pressure as traders stay cautious ahead of the US Federal Reserve’s policy decision due on Wednesday.
While interest rates are expected to remain unchanged, markets will closely track the Fed’s statement and Chair Jerome Powell’s comments for signals on future rate cuts.

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Weak domestic equities and continued foreign portfolio investor outflows have added to the pressure.
Rising crude oil prices, which have gained for the fifth straight week, have also weighed on the currency.

Dollar index movement

The dollar index extended its decline and slipped below the 97 mark. It settled at 96.89, down 0.52 per cent earlier this week. The index hit a four-month low after a rebound in the Japanese yen and rising geopolitical concerns in Europe. However, strong US core durable goods and overall durable goods order data provided some support to the dollar at lower levels.

Futures and market cues

The USD-INR January 28 futures contract settled higher at 91.8625, gaining 0.24 per cent on the National Stock Exchange on Friday.
Market participants expect high volatility in the dollar index due to global market uncertainty, geopolitical tensions, and the upcoming Fed meeting.

Likely to remain volatile

Manoj Kumar Jain of Prithvi Finnmart said the rupee is likely to remain volatile in the near term. He noted that equity market weakness, FPI outflows, and higher crude prices are pressuring the currency. However, expectations around a possible India-EU free trade agreement could offer some support at lower levels. Jain expects the dollar index to trade in the range of 95.85 to 98.80 this week. He sees the USD-INR pair moving in a broad range of 90.85 to 93.40.

Key levels to check

On the technical charts, the USD-INR January futures contract settled at a record high. The pair is trading above its moving average support of 90.95. The relative strength index is above 70, indicating strong momentum. The MACD also shows a positive crossover.
Support is seen at 91.55 to 91.30, while resistance is placed at 92.10 to 92.40. Jain advises traders to book full profits in long positions and wait for corrective dips before taking fresh long bets.