The USDINR currency pair has been a focal point for traders and investors, especially with its recent pullback in March 2025, where it recorded a 2% negative return for the month. The chart, spanning from 2005 to 2026, reveals a long-term uptrend that has persisted for over a decade. However, a key observation stands out: the fair valuation of USDINR is expected to be around the 75-77 levels in the long term, aligning with the 100-period Exponential Moving Average (EMA) on the monthly timeframe—a level the pair hasn’t touched since August 2011. In this blog, we’ll dive into the technical setup, the recent decline, and what this means for the USDINR’s long-term trajectory.
Chart Overview: A Historical Perspective
The USDINR chart provides a comprehensive view of the pair’s journey since 2005. Starting at around 44 in the mid-2000s, the pair embarked on a steady uptrend, accelerating through periods of global economic uncertainty and domestic challenges in India. By March 2025, the USDINR peaked near 86.8850 before pulling back to close at 85.8850, reflecting the 2% decline for the month. This pullback comes after a prolonged uptrend, with the pair consistently trading above its 100 EMA on the weekly timeframe since August 2011.
The 100 EMA, currently positioned around the 75-77 range, has acted as a significant long-term support level in the past. The fact that the USDINR hasn’t revisited this level in over 13 years suggests that the pair may be significantly overvalued relative to its historical trend. The recent decline, coupled with signs of overheated sentiment, could be the first step toward a deeper correction that brings the pair back to this fair valuation zone.
Technical Analysis: The Path to 75-77
Let’s break down the technicals. The USDINR’s long-term uptrend is evident, with higher highs and higher lows defining the chart since 2011. However, the 100 EMA on the monthly timeframe provides a critical insight into the pair’s fair valuation. This moving average, often used to gauge long-term trends, has been a reliable support level in the past. For instance, prior to 2011, the USDINR frequently oscillated around this EMA, using it as a base during corrections before resuming its uptrend.
Since August 2011, the USDINR has not tested this 100 EMA, indicating a prolonged period of deviation from its historical mean. The current price of 85.8850 is well above this 75-77 range, suggesting that the pair may be overextended. The 2% pullback in March 2025, while significant, is only a small step toward closing this gap. To reach the 100 EMA, the USDINR would need to decline by approximately 10-12% from its current level—a substantial move that would require sustained momentum in favor of the Indian Rupee.
The monthly RSI, which closed at 65.41 in March 2025, further supports the case for a potential correction. While not in overbought territory (typically above 70), the RSI’s proximity to this level indicates that the pair was approaching overheated conditions. The cooling of the RSI aligns with the recent price pullback, suggesting that the market may be rebalancing after a period of excessive bullish sentiment. If this cooling continues, it could pave the way for a deeper decline toward the 100 EMA.
The candlestick pattern for March 2025 shows a bearish reversal, with a strong red candle indicating strong acceptance on the monthly timeframe. It is a strong bearish signal, hinting at a potential shift in momentum that could drive the USDINR lower in the coming months or years.
Economic Context: Supporting the Rupee’s Strength
The recent decline in the USDINR, which reflects a strengthening of the Indian Rupee, can be attributed to several economic developments. In February 2025, India’s central bank cut interest rates for the first time in five years, a move aimed at stimulating economic growth. This rate cut likely encouraged investment and consumption, boosting economic activity and supporting the Rupee. The lagged effect of this policy change into March 2025 may have contributed to the 2% pullback in the USDINR.
Additionally, India’s economic fundamentals have shown resilience. Strong GDP growth in the third quarter of FY25, coupled with lower inflation rates in February 2025, likely enhanced investor confidence in the Indian economy. Lower inflation helps maintain the Rupee’s purchasing power, making it more attractive relative to the Dollar. Significant foreign direct investment inflows into India during FY25, particularly in the services sector, have also increased demand for the Rupee, providing further support against the Dollar.
On the global front, uncertainties in the US economy may have weakened the Dollar. Concerns over trade policies, potential tariff wars, and softening global growth prospects could have pressured the USD, making emerging market currencies like the Rupee more appealing. These global dynamics likely played a role in the Rupee’s strength in March 2025, contributing to the USDINR’s decline.
Long-Term Implications: A Return to Fair Valuation
The expectation of the USDINR returning to the 75-77 range in the long term is a bold but plausible scenario. This level, corresponding to the 100 EMA on the weekly timeframe, represents a fair valuation based on historical trends. However, reaching this level would require a significant correction from the current price of 85.8850. Let’s explore the potential path and implications of such a move.
To reach the 75-77 range, the USDINR would need to break through several key support levels. The first major support lies around 84, a level that has acted as a floor during previous corrections. Below that, the 82 level could provide additional support, having been tested multiple times in recent years. A break below 82 would open the door for a deeper decline toward the 75-77 range, aligning with the 100 EMA.
Such a move would have significant implications for the Indian economy. A stronger Rupee would make imports cheaper, benefiting consumers and businesses that rely on foreign goods. However, it could also hurt exporters, as their goods would become more expensive in international markets. For traders, a decline to 75-77 would present a long-term buying opportunity, as the pair would likely find strong support at the 100 EMA, potentially setting the stage for a new uptrend.
Trading Strategy: Positioning for the Long-Term Move
For traders looking to capitalize on the USDINR’s potential decline to the 75-77 range, a strategic approach is essential. The first step is to monitor key support levels at 84 and 82. A break below these levels with strong momentum would further confirm the bearish outlook, on the USDINR . The 75-77 range, corresponding to the 100 EMA, should be the ultimate target for this move.
Conclusion: A Long-Term Correction on the Horizon
The USDINR’s recent 2% decline in March 2025, coupled with the expectation of a fair valuation around the 75-77 range, points to a potential long-term correction. The 100 EMA on the weekly timeframe, which the pair hasn’t touched since August 2011, represents a significant support level that could act as a magnet for the USDINR in the coming years. Supported by India’s strong economic fundamentals, global uncertainties, and technical indicators like the cooling RSI, the stage is set for a deeper decline that could bring the pair back to its historical mean.
For traders and investors, the key is to remain patient and vigilant. The USDINR’s journey to the 75-77 range will likely be marked by volatility, with key support levels at 84 and 82 acting as critical milestones. Whether this correction unfolds over the next few months or years, the potential for a significant move lower makes the USDINR a pair to watch closely as we progress through 2025 and beyond.
