USD/INR remains range-bound as ambiguity surrounds US trade policies

Indian Rupee Holds Steady Against US Dollar Amid Trade Policy Uncertainty

In Thursday’s early trading, the Indian Rupee (INR) remained largely unchanged against the US Dollar (USD). The USD/INR currency pair continues to fluctuate within a narrow band near the 91.00 mark, as market participants await clearer signals regarding the direction of US trade policy developments.

US Trade Policy Developments and Market Impact

On Wednesday, US Trade Representative Jamieson Greer indicated that the US may consider raising tariffs to 15% or higher on certain countries, up from the recently implemented 10% rate. However, Greer did not specify which trading partners might be affected by these increased tariffs.

President Donald Trump had previously introduced a 10% global tariff in response to a Supreme Court (SC) decision that challenged his tariff measures. The SC ruled that Trump’s use of emergency economic powers to justify his tariff strategy was invalid, overturning the so-called reciprocal duties.

This ongoing uncertainty surrounding US trade policy has weighed on the US Dollar. Currently, the US Dollar Index (DXY), which measures the Greenback’s performance against a basket of six major currencies, is trading cautiously near 97.50.

Federal Reserve Policy and Market Expectations

On the monetary policy side, market participants widely anticipate that the Federal Reserve (Fed) will maintain its current interest rate range of 3.50%-3.75% during both the March and April meetings, according to the CME FedWatch tool.

Key Events to Watch: US-Iran Nuclear Talks and Oil Prices

Investors are closely monitoring the outcome of nuclear negotiations between the US and Iran taking place in Geneva. The results of these talks could have a significant effect on global oil prices, which in turn may influence the direction of the Indian Rupee.

For countries like India, which are heavily dependent on oil imports to meet their energy requirements, fluctuations in oil prices can have a pronounced impact on their currencies.

Foreign Investment and Indian Equity Markets

Meanwhile, renewed optimism among foreign investors toward the Indian equity market is enhancing the Rupee’s prospects. In February, Foreign Institutional Investors (FIIs) have been net buyers, acquiring shares worth Rs. 4,361.57 crore, reversing a trend of net selling that persisted for the previous seven months.

The return of FIIs to Indian equities is partly attributed to improving trade relations between the US and India. Earlier this month, both nations confirmed a trade agreement under which the US reduced tariffs on imports from India to 18%, down from 50%—a rate that previously included punitive measures related to oil purchases from Russia.

Domestic Economic Outlook

On the domestic front, investors are awaiting the release of fourth-quarter Gross Domestic Product (GDP) figures, scheduled for Thursday. The data is expected to show the economy growing at an annualized rate of 7.2%, a slowdown from the 8.2% expansion recorded in the third quarter of 2025.

Technical Overview: USD/INR Consolidates Near 91.00

As of the latest update, USD/INR is trading flat around the 91.00 level. The pair remains slightly above its 20-day Exponential Moving Average (EMA), maintaining a cautious upward bias, though upward momentum appears limited. After a surge earlier in the month, price action has stabilized, and the flattening 20-day EMA suggests a moderation in trend rather than a reversal.

The 14-day Relative Strength Index (RSI) continues to move within the 40.00-60.00 range, indicating a contraction in volatility.

• Immediate support is found at the 20-day EMA near 90.94. A break below this level could expose the recent reaction low at 90.58, followed by the February 3 low at 90.15.
• On the upside, initial resistance is seen at the January 22 low of 91.35, with the next resistance at the January 28 low of 91.66.

(This technical analysis was prepared with the assistance of an AI tool.)