Oil prices and foreign outflows weigh on euro to Indian rupee exchange rate

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Euro vs Indian Rupee down 0.5% today

Highlights

The Indian rupee weakened for three sessions as importer dollar demand, higher oil prices, and foreign outflows persisted.
The Reserve Bank of India is intervening to limit abrupt rupee swings without directly managing the exchange rate.
EUR/INR trades below key moving averages and shows strong bearish technical signals, with price expected from ₹105.3021 to ₹106.3605 and further downside probable.

Importer dollar demand and policy signals escalate rupee pressure

The Indian rupee has faced pressure over the past three sessions due to robust dollar demand from importers, elevated oil prices, and pronounced foreign outflows, according to Economictimes Indiatimes. Union Finance Minister Nirmala Sitharaman indicated that the Reserve Bank of India is taking steps to prevent abrupt rupee fluctuations but clarified that it does not set the exchange rate, as reported by Cnbctv18. Additionally, former RBI governor Raghuram Rajan suggested that refraining from excessive reserve depletion and allowing some rupee depreciation can help stabilize exports amid these pressures, according to Cnbctv18.

Technical momentum skews negative as oscillators diverge near support

On the hourly chart, EUR/INR is trading below the SMA-20, SMA-50, and SMA-200, with all three moving averages positioned above the current price. The Ichimoku Kijun at ₹106.2074 represents immediate resistance. Momentum indicators present a mixed but overall negative picture: MACD and ADX both tilt towards a prevailing sell bias, while RSI is near oversold at 30 and CCI also sits in oversold territory. However, Stochastic RSI indicates a strong buy, highlighting a divergence among oscillators. Sellers continue to dominate on intraday moves based on the Bull/Bear Power gauge, and the Awesome Oscillator also confirms the negative trend. Volatility remains subdued, with the price holding near the session's low and a minor downside gap registered.

Downside risk prevails as tight range limits EUR/INR rebound

Over the next two to three trading days, EUR/INR is expected to fluctuate within a volatility band of ₹105.3021 to ₹106.3605. The projection for further downside outweighs the odds of a rally, with only a 21% probability of an upward move versus 79% for continued weakness. Should the price remain within this range, conditions are likely to stay neutral, while a break below ₹105.3021 would open the door to further declines. Conversely, a decisive rebound above ₹106.2074 would be required to trigger any bullish reversal scenario.

Viktoras Karapetjanc, Traders Union expert, notes that the rupee remains under pressure due to persistent importer dollar demand, high oil prices, and ongoing foreign outflows. He observes that policy guidance from RBI officials points toward tolerance of moderate rupee weakness to support exports, while technical indicators confirm a prevailing bearish bias for EUR/INR below key averages. The analyst expects further downside risk unless resistance at ₹106.2074 is decisively reclaimed. "As long as macro headwinds and foreign outflows persist, I see the rupee staying weak and EUR/INR remaining heavy in the short term."

Earlier, analysts noted that EUR/INR was showing short-term bullish momentum within a broader context of long-term weakness. The current setup signals a shift in tone, with downside risk now dominant, making a close below ₹105.3021 the critical level to watch for a potential new leg lower.

Source of Data: EUR Price Analysis by TU

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

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