RBI rate decision is in focus after the Indian rupee rose on broad US dollar selling and intervention-led FX flows late last week.
The source article said the dollar fell after the FOMC decision, as extra dissent from Fed’s Kashkari did not land as a major hawkish surprise. Then, heavy dollar-selling linked to interventions by Japan and South Korea added to the move on Thursday. On Friday, losses deepened after reports said the US Treasury joined the intervention, the first joint operation since 2011.
The article added that Japan’s Ministry of Finance and US Treasury Secretary Bessent said they would not hesitate to carry out more joint interventions. However, with USD/JPY now near April-May levels, the source said the chance of another near-term intervention looks low. As a result, the dollar may return to trading on fundamentals.
RBI Rate Decision Takes Center Stage
On the rupee side, the source said the currency gained from the lack of major hawkish surprises at the FOMC meeting, heavy US dollar-selling flows, and positive US-Iran headlines. It also said the RBI’s intervention near record lows now looks well timed.
Looking ahead, the source said the rupee will need a dovish repricing in Fed rate expectations and more de-escalation in the Middle East to extend gains. Meanwhile, the RBI rate decision is due on Wednesday. The source said the RBI is expected to leave the repo rate unchanged at 5.25%, while the MPC is expected to keep its neutral stance.
The article also said the RBI may strike a cautious or slightly hawkish tone. In addition, a few investment banks expect the central bank to signal that ongoing global volatility or lasting spikes in crude prices could force rate hikes in the second half of FY27.
USDINR Tests Key Support Levels
In the broader view, the source said the Indian rupee remains in a bearish structural trend against the US dollar. Therefore, dip-buyers may keep looking for chances around strong technical levels to push USD/INR to new highs.
On the daily chart, the article said USDINR fell below the 96.10 support zone after intervention-driven dollar selling. It said the pair is now moving toward the next key zone near 95.10. The source added that buyers may step in there, with a move back toward 96.10 in view, while a break lower could open the way to 94.00.
The source also pointed to a potential falling wedge on the four-hour chart. Finally, it listed this week’s data calendar, including US ISM Manufacturing PMI on Monday, US Job Openings on Tuesday, the RBI rate decision, US ADP and ISM Services PMI on Wednesday, US Jobless Claims on Thursday, and the US NFP report on Friday.
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Source: InvestingLive
