USD/INR forecast: Rupee forms a Triangle pattern ahead of RBI decision

The USD/INR exchange rate has formed a symmetrical triangle pattern ahead of the Reserve Bank of India (RBI) decision and US non-farm payrolls (NFP) data. The pair was trading at 82.13, which was about 0.86% below the highest point this year.

RBI interest rate decision

The RBI will be the second major central bank to meet this week after the RBNZ. The bank will meet at a time when India’s inflation remains substantially high. Data published in March revealed that the country’s inflation jumped to 6.4% in February, which is above its tolerance range of 4% and 6%.

Therefore, analysts believe that the RBI will continue hiking interest rates in this meeting. Precisely, they expect that the bank will increase rates by 0.25% to 6.75%. Like other central banks, the RBI has been hiking rates since last year. 

Analysts also believe that the RBI will signal that it was ending the tightening process considering that the economy is showing signs of slowing down. On Tuesday, I wrote that the head of India’s third-biggest bank was warning about the slowdown of the economy. 

In his statement, the head of Axis Bank warned that while public data were attractive, the real situation on the ground was a bit different. Therefore, there is a possibility that this will pause its hikes after this week’s increase. In a note, Shubhada Rao, the founder of QuantEco said:

“If growth shows a dramatic slowdown only then RBI would perhaps be prompted to start cutting rates but such easing may only come in the fiscal year that starts in April 2024.”

The USD/INR price next catalyst will be from the United States, where the statistics agency will publish the latest non-farm payrolls (NFP) data on Friday. Economists believe that the country’s economy created over 200k jobs while the unemployment rate remained at 3.6%.

USD/INR chart analysis

USDINR chart by TradingView

The 4H chart shows that the USD to INR price has been in a tight range in the past few days. Most importantly, the pair has formed a symmetrical triangle pattern that is shown in blue. This triangle pattern is now nearing its confluence level.

The pair is also consolidating at the 25-period and 50-period exponential moving averages while the MACD has moved below the neutral point. Therefore, I suspect that the pair will have a bullish breakout after the RBI decision this week. If this happens, it will move to the next resistance at 82.60.