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📊 WEEKLY NEWSLETTER : - USDINR – OVERVIEW - WEEKLY PROJECTION !!

  • Writer: fxmethods
    fxmethods
  • 8 hours ago
  • 3 min read

USD/INR Weekly Newsletter

Previous Weekly Range- (27TH JAN TIO 30 JAN 2026 – Spot): Open: 91.76 | High: 92.0175 | Low: 91.52 | Close: 91.99, Weekly Change: +0.25% | Directional Bias: Mild USD strength continuation.

I. Macro & Policy Highlights — Indian Budget 2026-27 : Budget Priorities & Growth Outlook


  • India’s Union Budget 2026-27 emphasizes record infrastructure spending of ₹12.2 trillion (+11.4% YoY) and a continued push for manufacturing and supply chain resilience in sectors such as semiconductors, bio-pharma, chemical parks, and rare earth corridors.

  • Fiscal deficit target for FY27 is set at 4.3% of GDP, slightly lower than prior estimates, signaling fiscal discipline alongside development spending.

  • Gross market borrowing increased to ₹17.2 lakh crore, which may keep bond yields elevated and influence yield spreads vs. the U.S. — a key driver of currency flows.

  • Focus on healthcare (₹1 lakh crore+) and biopharma initiatives reflects broader structural reforms.

Implications for USDINR:

  • A strong capex push and  policy stability are positive for medium-term investor confidence, potentially supporting FPI/FII flows into Indian assets.

  • However, heavy government borrowing may keep local yields elevated, which can be neutral to mildly supportive for the INR vs. USD if investors price carry.

Monetary & Financial Conditions

  • RBI’s accommodative stance (rate cuts in 2025) has been supportive of credit growth while inflation remains near target.

  • Banking sector asset quality is robust and credit expansion remains healthy, underpinning domestic financial stability.

  • Foreign exchange reserves remain strong but a widening trade deficit persists, a structural factor for USD demand.


II. Geopolitical & Global Drivers : Key Global Themes


  • US Federal Reserve policy and  interest rate differentials remain the dominant external driver for USD/INR. Persistently higher U.S. yields attract capital into USD assets, pressuring INR. 

  • Geopolitical tensions and trade dynamics (e.g., tariffs/actions involving major trading partners) continue to be risk-off drivers favouring USD strength.

  • Oil price fluctuations materially impact India’s trade and current account deficits, due to high import dependency — a consistent driver of INR volatility.


III. USD/INR Forecast & Technical Picture

Technical Levels (Weekly- 2ND TO 6TH FEB 2026) Given last week’s price action and recent technical anatomy:

Support:

  • 91.50–91.60 — weekly support zone (previous lows)

  • 91.20–91.30 — structural demand region

Resistance:

  • 92.10–92.20 — short-term resistance (prior weekly highs)

  • 92.60–92.80 — notable psychological and supply zone

Candlestick & Indicator Readouts : - (Assuming typical weekly candlestick and oscillator setups)

Observations:

  • A small bullish engulfing / indecision candle on the weekly suggests consolidation.

  • RSI (Weekly): Likely mild bullish momentum but not overbought, indicating potential for continuation up to resistance.

  • MACD: Weekly histogram narrowing indicates possible sideways to mild bullish orientation.

Pattern Signal:

  • If current price breaches 92.10 decisively with volume, the next target is 92.60.

  • If it fails near resistance and closes below 91.70, short-term bias shifts weaker.

IV. Trade & Hedge Framework (1 Week View) : Directional Bias : Neutral-Bullish to Range Extension Up (short term)Rationale:


  • Macro risk with fiscal spending and stable growth narrative supports INR flows into assets.

  • External pressure from global rate spreads and U.S. yield support keep mild USD strength.

Trade Setups

Tactical Long USD/INR (FX Spot or Forwards)

  • Entry: 92.00 / break above 92.10

  • Target: 92.60

  • SL: 91.70

Range Play (Mean Reversion)

  • Sell near: 92.10–92.20

  • Buy near: 91.50–91.60

  • Targets: mid-range 91.80

Hedge Position (Imports / Payables)

  • Covered Call: Establish forward buy zones near 91.50–91.60 to hedge against USD strength above 92 — reducing cost while preserving upside.

Risk Signals

  • Break below 91.40 invalidates the mild bull-range thesis and signals potential deeper correction.

  • Geopolitical shock or major Fed pivot could accelerate moves beyond established ranges.

 V. Indicators & Patterns to Watch This Week


  • Weekly RSI & MACD divergence — track for early direction hints.

  • Price action at 92.10 — key breakout zone.

  • Volume spikes on breaks — confirm commitment.

  • Oil price moves — directly impact INR via CA deficit pressures.

 Summary View

Component

Implication

Indian Budget 2026-27

Strong infrastructure & fiscal strategy; supportive for INR in medium term.

Monetary & Credit Conditions

Supportive liquidity environment; balanced inflation.

Global Drivers

USD strength persists if Fed remains hawkish; geopolitical risk enhances USD demand.

Technical Outlook

Mild bullish/range extension; key breakout at 92.10.

 ⚠️ Disclaimer – FXMethods

The information provided by FXMethods is for educational and informational purposes only and should not be considered financial, investment, or trading advice. Market data, analysis, and commentary are based on sources believed to be reliable, but FXMethods makes no representation or warranty as to their accuracy, completeness, or timeliness. Trading foreign exchange, commodities, cryptocurrencies, and other financial instruments involves significant risk and may not be suitable for all investors. Past performance is not indicative of future results. Users are strongly encouraged to consult with a licensed financial advisor before making any investment or trading decisions. FXMethods assumes no responsibility for any losses incurred directly or indirectly from the use of its information or services.

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