USD/INR recovers even as Greenback underperforms amid US trade policy uncertainty

The Indian Rupee (INR) gives back early gains and turns lower against the US Dollar (USD) during afternoon trading hours in India on Monday. The USD/INRedges up to near 91.00, despite the US Dollar (USD) remaining under pressure.

As of writing, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades 0.21% lower to near 97.45 after recovering half of its early losses. The Greenback underperforms its major currency peers as the United States (US) Supreme Court’s (SC) ruling against President Donald Trump’s tariff policy has raised questions about the credibility of US policies.

In a verdict on Friday, the US SC stated that President Trump overstepped his authority by invoking rights under the International Emergency Economic Powers Act (IEEPA) to impose wide-ranging tariffs on trading partners.

In response, US President Trump stated that he was “ashamed of certain members of the court” and announced 15% global tariffs to keep trade pressures intact.

In addition to US trade policy uncertainty, weak Q4 Gross Domestic Product (GDP) and S&P Global Purchasing Managers’ Index (PMI) data for February have also weighed on the US Dollar. The data showed on Friday that the US GDP grew at an annualized pace of 1.4%, slower than the 3% estimate and the prior release of 4.4%. S&P Global Composite PMI arrived lower at 52.3 from 53.0 in January as both the manufacturing and service sector activity grew moderately.

Meanwhile, the US SC’s verdict against Trump’s tariff policy has put the Indian economy in a better position. The imposition of 15% global tariffs by Trump after SC invalidating import duties backed by invoking IEEPA turns out to improve the competitive advantage of Indian exporters in the global market, as duties confirmed in the latest US-India trade talks on New Delhi were at 18%.

Also, the scheduled visit of Indian trade negotiators to the US to accelerate deal formalities, which was expected this week, has been delayed for an uncertain period.  

Even as the US and India have reached an agreement, the absence of improvement in the sentiment of overseas investors toward the Indian stock market could turn out to be a serious drag on the Indian Rupee. So far in February, Foreign Institutional Investors (FIIs) have offloaded their stake worth Rs. 2,011.24 crore despite the trade deal confirmation on February 2. On Friday, FIIs also turned out to be net sellers and sold shares worth Rs. 934.61 crore.

Technical Analysis: USD/INR holds key 20-day EMA

USD/INR trades higher to near 91.00 at the press time. Price holds just above the 20-day Exponential Moving Average (EMA) at 90.888, while the average flattens after a recent downswing, signaling consolidation. The slight uptick in the EMA suggests initial support developing beneath the spot.

The 14-day Relative Strength Index (RSI) inside the 40.00-60.00 range indicates a broader sideways trend.

The 20-day EMA remains the immediate pivot for directional cues at 90.8797, with sustained acceptance above it keeping a mild bullish bias intact. A clearer trend would emerge if the EMA slope steepens; otherwise, price action would stay contained around this moving average.

(The technical analysis of this story was written with the help of an AI tool.)