Indian Rupee strengthens as Asian currencies steady

USD/INR weakened on Thursday after posting modest gains in the previous session. The pair slipped as the Indian Rupee (INR) found support, with Asian currencies largely steady despite higher United States (US) Treasury yields following strong US jobs data. Traders told Reuters the Reserve Bank of India (RBI) likely intervened, helping the Rupee open stronger.

According to Reuters, a bank currency trader said the US–India trade deal and the latest US employment figures “change nothing.” The trader noted that the Rupee’s sensitivity to external cues has been limited in recent sessions. With the payrolls report failing to trigger significant moves in other asset classes, attention has shifted back to domestic dollar flows and market positioning.

The INR is further supported by equity inflows and broad-based US Dollar (USD) weakness. However, gains may remain capped amid persistent Greenback demand from local corporates.

US Dollar declines despite growing Fed caution

• The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, has pared its gains from the previous session and is trading near 96.80 at the time of writing. The US Consumer Price Index (CPI) inflation report will be the highlight later on Friday.
• The Greenback weakens despite growing expectations that the Fed will keep rates unchanged after stronger-than-expected US jobs data. The CME FedWatch tool suggests that financial markets are now pricing in nearly a 94% probability that the Fed will leave rates unchanged at its next meeting, up from 80% the previous day. Markets anticipate the first cut likely in June and a possible follow-up in September.
• The US Bureau of Labor Statistics (BLS) reported on Wednesday that Nonfarm Payrolls (NFP) increased by 130,000 in January, following a revised 48,000 gain in December (previously 50,000), and surpassed market expectations of 70,000. Meanwhile, the Unemployment Rate edged down to 4.3% from 4.4%.
• The US Census Bureau reported Tuesday that US Retail Sales were flat at $735 billion in December, following a 0.6% rise in November and missing expectations for a 0.4% increase. On a YoY basis, Retail Sales rose 2.4%, while total sales for October–December 2025 increased 3.0% (±0.4%) compared with the same period a year earlier.
• US inflation expectations eased, with median one-year-ahead inflation expectations falling to 3.1% in January, the lowest in six months, from 3.4% in December. Food price expectations were unchanged at 5.7%, while three- and five-year expectations remained steady at 3%.
• Fed Governor Philip Jefferson said future policy decisions will be guided by incoming data and assessments of the economic outlook, adding on Friday that the labor market is gradually stabilizing. Meanwhile, Atlanta Fed President Raphael Bostic noted that inflation has remained elevated for too long, stressing in a Bloomberg interview on Friday that the Fed cannot lose sight of inflationary risks.
• The United States (US)–India interim trade framework. New Delhi and Washington on Friday unveiled an interim framework aimed at lowering tariffs, reshaping energy ties, and deepening economic cooperation. The announcement follows a breakthrough in prolonged negotiations earlier last week and helped lift the Rupee to its strongest weekly gain in more than three years.
• The US and India reached a wide-ranging trade agreement involving India buying more than $500 billion in purchases, tariff reductions, and provisions on digital trade, significantly reshaping bilateral commercial relations. India will also eliminate or lower tariffs on US industrial products and a broad spectrum of agricultural goods, with reductions covering food items such as grains, edible oils, fruit, wine, and spirits.

USD/INR trades near 90.50 after pulling back from the nine-day EMA

USD/INR is trading around 90.60 at the time of writing. Daily chart analysis suggests a prevailing bearish bias, with the pair moving within a descending channel. The 50-day Exponential Moving Average (EMA) trends higher, keeping the broader bias tilted upward as price holds above it. The nine-day EMA has flattened at 90.8611 and caps near-term rebounds, with spot hovering just beneath it. 14-day Relative Strength Index (RSI) prints 49.74 (neutral), indicating balanced momentum after cooling from recent overbought readings.

Initial support is located at the 50-day EMA at 90.51, followed by the four-week low of 90.15. A decisive break below this level could weaken medium-term momentum and open the door toward the channel’s lower boundary around 89.10. On the upside, immediate resistance stands at the nine-day EMA near 90.83. A sustained move higher may target the upper boundary of the channel around 91.50, followed by the record high of 92.51 reached on January 28.

(The technical analysis of this story was written with the help of an AI tool.)