The Indian Rupee (INR) continues its losing streak for the fourth consecutive trading day against the US Dollar (USD). The USD/INR pair is approaching its all-time high of 91.55 even amid pressure on the Dollar from US-Eurozone disputes over Greenland.
Indian importers’ strong demand for the US Dollar drives advancement of the USD/INR pair. This demand persists due to the lack of a trade agreement between the US and India, despite negotiators expressing optimism for over six months.
Impact on Foreign Interest in Stock Market
The ongoing US-India trade stalemate affects foreign interest in the Indian stock market. Foreign Institutional Investors (FIIs) have sold shares worth Rs. 29,315.22 crore in January, marking a consistent outflow over six months.
The daily USD/INR chart shows trading at 91.2570, with a 20-Exponential Moving Average below the price at 90.4727. The 14-day Relative Strength Index at 67.67 indicates strong bullish momentum.
The broader context includes the US Dollar gaining against the Rupee amid US-EU tensions over Greenland. US assets face pressure from new tariffs announced by President Trump, impacting market dynamics.
Traders expect the Federal Reserve to maintain interest rates despite concerns about job risks leading to discussions about adjustments.
Given the Indian Rupee’s weakness, we see the upward trend in USD/INR continuing in the near term. The pair is pushing towards its all-time high of 91.55, and the momentum suggests traders should favor strategies that profit from a rising dollar against the rupee. With the spot price at 91.2570, this leaves limited room before a significant psychological level is tested.
Technical Analysis and Trading Strategy
The technical setup supports this bullish view, as the price remains well above the 20-day EMA of 90.47, a level we now view as a critical support zone for any pullbacks. The Relative Strength Index is nearing overbought territory at 67.67, which confirms the strength of the current move. We should therefore consider any dips toward the 90.47 support band as potential buying opportunities.
For the coming weeks, we believe buying USD/INR call options with strike prices at or above 91.50 is a prudent strategy to capture further upside. Traders holding long futures positions should consider using the 20-EMA as a trailing stop-loss to protect profits. The persistent trend means shorting the pair carries significant risk until we see a clear reversal signal.
The pressure on the rupee is fundamentally driven by sustained selling from Foreign Institutional Investors. Data from the National Securities Depository Limited confirms this heavy outflow, which has now exceeded ₹29,300 crore just this month. This trend of foreign capital leaving Indian equities has been a consistent headwind for the rupee since the middle of 2025.
Furthermore, strong US Dollar demand from Indian importers continues to weigh on the rupee, a situation worsened by the stalled US-India trade negotiations. Recent reports show dollar purchases by oil marketing companies increased by over 10% in the last quarter of 2025, reflecting inelastic import demand. The lack of a trade deal after more than six months of talks prevents a recovery in foreign investor confidence.
Looking at volatility, we’ve seen implied volatility in USD/INR options climb to a six-month high. This indicates the market is pricing in larger price swings, making long volatility strategies like straddles potentially profitable around key data releases or central bank meetings. However, the high premiums also make selling uncovered options exceptionally risky in this environment.
Historically, we saw a similar setup in the third quarter of 2024 when a prolonged FII sell-off pushed the RSI above 70 before the pair consolidated for a few weeks. While the current momentum is strong, we should be prepared for a potential pause or a brief pullback if the pair’s RSI moves firmly into overbought territory above 70. This pattern suggests that while the path of least resistance is up, the rally may not be a straight line.
