Bias: USD/INR is bullish-to-range-bound, as it sits above its 90-day average and in the upper half of the 3-month range.
Key drivers:
- Rate gap: The US Federal Reserve is expected to cut rates toward neutral in 2026, which could narrow the USD/INR gap and limit further upside in USD/INR.
- Macro factor: RBI interventions to stabilise the rupee remain in play as capital outflows persist and India runs a trade deficit risk.
Range: USD/INR is likely to hold within the current three-month range, with a drift toward the upper end if external risks rise.
What could change it:
- Upside risk: stronger US data or a hawkish Fed stance could push USD/INR higher.