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Indian Rupee approaches unprecedented lows as RBI's ongoing efforts prove ineffective

Indian Rupee approaches unprecedented lows as RBI's ongoing efforts prove ineffective

101 finance101 finance2026/01/16 10:57
By:101 finance

Market Fundamentals Overview

US Dollar (USD)

The US Dollar gained strength yesterday after robust US jobless claims figures were released. This prompted traders to unwind their earlier dovish positions, which had been based on softer core inflation data. As a result, the anticipated rate cuts by year-end dropped to 48 basis points, down from 54 basis points prior to the data release.

Federal Reserve officials remain committed to a cautious, data-driven approach. The improvement in employment numbers continues to support the US Dollar, and this upward momentum could persist or even intensify if economic indicators remain positive.

Indian Rupee (INR)

The Indian Rupee continues to weaken against the US Dollar, with recent technical developments accelerating this downward trend as the Reserve Bank of India's interventions have not been effective.

India's annual inflation rate climbed to 1.33% in December, up from 0.71% in November. Although this is still well below the RBI’s 4% target, it is approaching the lower end of their 2% tolerance band. Market participants do not anticipate another rate cut from the RBI at the upcoming February meeting.

On the international trade front, investors are closely monitoring the possibility of increased tariffs on India after President Trump threatened to impose a 25% tariff on any nation conducting business with Iran. Given India’s significant trade relationship with Iran, there is heightened concern about potential further escalations.

USDINR Technical Analysis – Daily Chart

USDINR Daily Chart

The daily chart shows that USDINR has decisively broken above a major resistance area near 90.40. This breakout has attracted more buyers, who are now aiming for a move toward the upper boundary of the channel around 92.00. The prevailing trend favors buying on pullbacks, so sellers may need to wait for the price to approach the channel’s upper edge or drop below the lower trendline before acting.

USDINR Technical Analysis – 4-Hour Chart

USDINR 4 Hour Chart

The 4-hour timeframe highlights the swift rally that followed the breakout, as buyers entered the market with increased confidence. Should the price retrace to the former resistance—now acting as support—buyers are likely to re-enter, managing risk just below this level as they target the channel’s upper boundary. Conversely, sellers will be looking for a move back below support to initiate a deeper correction toward the lower end of the channel.

USDINR Technical Analysis – 1-Hour Chart

USDINR 1 Hour Chart

On the 1-hour chart, the outlook remains largely unchanged. Buyers are expected to seek opportunities to enter near the 90.40 support level, while sellers will be waiting for a decisive break below this area to consider short positions.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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