USD/INR Prediction: USD to INR Forecast as it Breaks Key Support

Summary:
• The USD to INR price tilted lower on Monday morning on the back of a relatively weak US dollar. The USD/INR pair is trading at 77.47

The USD to INR price tilted lower on Monday morning on the back of a relatively weak US dollar. The USD/INR pair is trading at 77.47, which is a few points below its record high of 77.80, which it reached earlier this month. It has already jumped by over 5% this year as the US dollar strength continued. 

The Indian rupee, like other emerging market currencies, declined against the US dollar as the Federal Reserve continued tightening its monetary policy. The dollar index rose to a 20-year high of $105.50. Recently, however, the USD/INR pair has retreated slightly due to profit-taking and the fact that the Reserve Bank of India (RBI) has also started to tighten its policy.

The USD to INR pair will have a muted Monday since the US markets will be closed for the Memorial weekend. This week, the key catalyst for the pair will be the upcoming US non-farm payroll (NFP) that will come out on Friday. Analysts believe that the country’s unemployment rate declined from 3.6% in April to 3.5% while hiring slowed.

There will be some notable numbers from India. On Tuesday, the RBI will publish the latest monetary and credit information review while the statistics agency will release the latest GDP data for the fourth quarter. The other notable data will be the Nikkei manufacturing PMI data, which is expected to have declined from 54.7 in April to 54.2 in May. The final important data will be the latest trade numbers, which will come out on Thursday.

USD to INR forecast

The four-hour chart shows that the USD/INR pair has been in a tight range in the past few weeks. In this period, the pair has managed to move below the important resistance at 77.81 to the current 77.44. The price has found some support along the ascending trendline shown in black. 

Also, the USD to INR has formed a double-top pattern and is above the notable support at 77.16, which was the highest point on March 7th. Therefore, the pair will likely keep falling as bears attempt to test the latter support. The stop-loss for this trade is at 77.80.