US dollar to Indian rupee forecast: Weak momentum near ₹94.5566 support

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US Dollar vs Indian Rupee drops 0.84%

Highlights

The Reserve Bank of India supplied US dollars directly to major state-run oil companies using a special window to ease market demand.
RBI imposed new restrictions on corporate FX derivatives and a 20% reserve requirement on select contracts to reduce USD outflow risks.
USD/INR trades below short- and medium-term averages with momentum indicators signaling persistent selling pressure and a projected range of ₹94.5566 to ₹96.2368.

Rupee steadied as RBI dollar supply and curbs ease volatility

The Reserve Bank of India (RBI) introduced several targeted measures to stabilize the rupee, as reported by Fxstreet. Most notably, RBI directly supplied US dollars to three major state-run oil marketing companies through a special window, which reduced these firms' need to access the open market for large dollar purchases, helping to ease spot demand for the greenback. Complementing this, new restrictions on corporate foreign exchange derivatives and the imposition of a 20% reserve requirement on select contracts further tightened access to USD liquidity, cumulatively reducing volatility and outflow risks. Together, these regulatory actions have contributed to a more orderly market environment against a backdrop of shifting institutional flows.

Intraday selling pressure intensifies as technicals flag weakness

Technical analysis shows USD/INR trading below the MA-20 and MA-50 on the working timeframe, while staying above the MA-200, which acts as major long-term support. The Ichimoku Kijun level at ₹96.2338 is identified as immediate resistance, with a support level near ₹94.5566. Momentum readings reveal continuing seller dominance: both MACD and ADX indicate sell conditions, while RSI at 28.689 and CCI in oversold territory flag intraday weakness. Stochastic RSI, however, signals a buy, suggesting a potential short-term technical divergence. Bull/Bear Power and the Awesome Oscillator both align with prevailing sell momentum, affirming intraday selling pressure.

Bearish momentum prevails as downside risks outweigh reversal odds

In the short term, USD/INR is expected to consolidate within the ₹94.5566 to ₹96.2368 range, reflecting typical volatility relative to current levels. Downside is favored, with a 78% probability of a further decline and just a 22% chance of reversal. Should price break above the immediate resistance at ₹96.2338, a bullish case could unfold, while a breach of support near ₹94.5566 would reinforce the bearish scenario.

Viktoras Karapetjanc, expert at Traders Union, sees the RBI's intervention as a significant stabilizing force for the rupee. He notes that direct dollar supply and tighter corporate FX regulations have helped limit volatility and capital outflow pressure. The analyst believes technical signals currently favor sellers, but regulatory action may soon translate into a more constructive environment. In his words: "If RBI’s support continues and the rupee holds above key long-term averages, I expect improved confidence and reduced downside risk for USD/INR in the coming days."

Previously it was reported that the Reserve Bank of India introduced a special US dollar supply window for public sector oil marketing companies to address their daily foreign exchange needs. The latest trading action and regulatory interventions reinforce the trend of reduced dollar demand pressure, with downside risks prevailing in USD/INR as the pair approaches critical support levels.

Source of Data: USD Price Analysis by TU

The analysis is based on a proprietary model combining technical, on-chain, and expert data. Not investment advice. See methodology

The information is based on forecasts and does not constitute investment advice or a guarantee of future results. Market conditions may change. See our Disclaimer and Editorial Integrity for details.