USD/INR forecast: trade setup ahead of US NFP data

The USD/INR exchange rate moved sideways on Friday after the latest Reserve Bank of India (RBI) interest rate decision. It also wavered ahead of the coming US Non-Farm Payrolls (NFP) data. The pair was trading at 83.40, where it has been stuck at in the past few weeks.

RBI decision and US NFP data ahead

The biggest INR news on Friday was the decision by the RBI. In it, the bank decided to leave interest rates unchanged at 6.50%, where they have been stuck at in the past few months. It also left the reverse REPO rate at 3.35% and the cash reserve ratio at 4.50%.

Most economists were expecting the central bank to leave rates unchanged since it is winning the battle against inflation. The most recent data revealed that Indian inflation dropped to 4.87% in October. 

Economists believe that the RBI will hold rates at the current phase for a while and then start cutting them in 2024 because the economy is slowing. The RBI expects that the country’s economy will grow by 7% this year as demand rose. 

In a separate report, the S&P Global said that India will be the third-largest economy in the world by 2030. This means that it will pass both India and Germany, which are now the third and fourth-biggest economies in the world. 

The other important USD/INR news will come in the afternoon when the US publishes the latest non-farm payrolls (NFP) data, which will set the tone for the next actions of the Federal Reserve.

Economists polled by Reuters expect the data to show that the economy created 180k jobs in November. They also expect these numbers to show that wage growth rose by 4% while the unemployment rate remained steady at 3.9%.

These numbers, together with next week’s inflation figures, will provide more information about what to expect in the next meeting. Strong jobs and inflation numbers will provide the Fed with an incentive to hike interest rates.

USD/INR technical analysis

USDINR chart by TradingView

The USD to Indian rupee exchange rate has been in a tight range in the past few weeks. It has remained at the all-time high level of 83.41 since September. In this period, the pair has moved above the 50-period moving average and the ascending trendline shown in green.

The pair has formed an ascending triangle pattern, which is usually a bullish sign. Therefore, the outlook for the pair is bullish, with the next point to watch being at $85. This view will be confirmed if the price moves above the resistance point at 83.41.