• USD/INR retreats after hitting a fresh all-time high of 92.19 on Wednesday.
• The Indian Rupee may face pressure from dollar demand tied to maturing NDF positions and month-end importer buying.
• The US Dollar could strengthen as Treasury Secretary Bessent reaffirmed the commitment to a strong dollar policy.

USD/INR depreciates after registering more than 0.5% gains in the previous session. The Indian Rupee (INR) gains ground amid speculation of the Reserve Bank of India (RBI) intervention, aiming to curb losses as the pair touched a fresh all-time high of 92.19 on January 28.

The INR's weakness was driven by broad weakness in Asian currencies as the US Dollar strengthened after US Treasury Secretary Scott Bessent reaffirmed the US commitment to a strong dollar policy. Additionally, the Indian Rupee (INR) could face pressure from dollar demand driven by maturing NDF positions and month-end importer buying.

Reuters quoted a Singapore-based hedge fund portfolio manager as saying he was surprised by the magnitude of the move, noting that markets appear to be pre-empting upcoming NDF maturities and that stop-loss orders may have been triggered. He added that the key question is how the Reserve Bank of India (RBI) will respond if the rupee weakens beyond 92.00, whether it allows the USD/INR pair to reprice higher or intervenes to pull it back.

The Indian Rupee (INR) failed to find support from improved sentiment following the India–EU trade deal, which is expected to lower tariffs on most Indian exports. India has also decided to cut tariffs on EU car imports to 40% from as high as 110%.

Most economists polled by Reuters expect the Reserve Bank of India (RBI) to keep its key policy rate at 5.25% through 2026, as the central bank evaluates the economic impact of previous interest rate cuts.

US Dollar struggles despite reaffirmed commitment to a strong dollar policy

• The US Dollar Index (DXY), which measures the value of the US Dollar against six major currencies, is losing ground after registering over 0.5% gains in the previous session and trading near 96.10 at the time of writing.
• However, the Greenback found support after Treasury Secretary Scott Bessent reaffirmed the US commitment to a “strong dollar policy,” pushing back against earlier comments from US President Donald Trump that suggested tolerance for a weaker currency. Bessent stressed that solid US fundamentals and sound policy settings should continue to draw capital inflows, rejecting speculation of any US intervention to sell dollars against the Japanese Yen (JPY).
• The US Federal Reserve (Fed) decided to keep interest rates unchanged at its January meeting on Wednesday, pointing to still-elevated inflation and resilient economic growth.
• Fed Chair Jerome Powell noted during the post-meeting press conference that job gains have moderated and the unemployment rate has shown signs of stabilization, adding that the Fed is “well positioned” to assess incoming data on a meeting-by-meeting basis and remains off a preset path for future rate decisions.
• Meanwhile, Morgan Stanley analysts said in a note that further policy easing largely hinges on clear evidence of disinflation, which they expect to emerge later in 2026. As a result, they maintain their forecast for rate cuts in June and September.
• US President Donald Trump would soon announce his nominee to replace Fed Chair Jerome Powell, fueling speculation that the next chair could favor faster interest rate cuts.
• Indian Prime Minister Narendra Modi’s government has agreed to immediately cut duties on select vehicles priced above EUR 15,000, with rates set to gradually fall to 10%, easing market access for automakers such as Volkswagen, Mercedes-Benz, and BMW.
• The US could remove the 25% punitive tariffs imposed on India in mid-2025 for purchasing Russian Oil, following comments by US Treasury Secretary Scott Bessent on the sidelines of the World Economic Forum in Davos last week, which fueled speculation about easing trade tensions.
• RBI’s INR 1 lakh crore liquidity infusion via government bond purchases is expected to stabilize funding conditions. With the Union Budget and clarity on US–India trade timelines pending, markets are likely to stay cautious, according to Reuters.

USD/INR edges lower after pulling back from record highs above 92.00

USD/INR is trading around 92.00 at the time of writing. Daily chart analysis points to a sustained bullish bias, with the pair rising within an ascending channel pattern. However, the 14-day Relative Strength Index (RSI) at 74.00 signals overbought conditions, suggesting the pair may be overstretched in the near term. This increases the risk of a corrective pullback or consolidation, even as the broader trend remains bullish.

Immediate resistance is seen at the January 28 all-time high of 92.19, followed by the upper boundary of the ascending channel near 92.70. On the downside, the initial support lies at the lower channel support around 91.60, followed by the nine-day Exponential Moving Average (EMA) at 91.48.