USD/INR Forecast: Consolidates Against Indian Rupee Below ₹89

• The US dollar has drifted a little bit lower against the Indian rupee during the trading session on Friday, with the ₹89 level above being a significant amount of resistance.
• If we can break above the ₹89 level, then it’s possible that we could go higher, but it’s worth taking a bit of a breather here and absorbing the gains that the market had seen on Tuesday, as we smashed to the ₹88.50 level.

Speaking of the ₹88.50 level, it’s worth noting that the level had been extraordinarily difficult to get above, and now that we have done this, it opens up a little bit of a momentum driven market. After all, we have been in an uptrend for some time, so every time we break a little bit higher, it does make a certain amount of sense that there is a bit of follow-through. However, keep in mind that the Bank of India does dip its hands into the currency pair occasionally, and it certainly manipulates the Indian rupee in a somewhat capped type of market. In other words, the Indians are letting the rupee drift a little bit lower, but not uncontrollably so.

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A Grind Higher

Keep in mind that this pair does tend to grind overall, and I think that will be the overarching theme of any move higher. We could get a little bit of a pullback here, but the ₹88.50 level should end up being significant support, just as it had been significant resistance and I would anticipate seeing a lot of “market memory” in that area. On the other hand, if we can break above the ₹89 level, then it’s likely that the market will move another half rupee to the upside, looking at the ₹89.50 level.

If we were to break down below the ₹88.50 level, then I think that there will be a significant amount of support all the way down to the ₹88.00 level, an area where the 50 Day EMA is currently racing toward. I think that is your “floor in the market”, but I also recognize that overall, it’s easier to just simply buy short-term pullbacks and be patient.

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