• The Indian Rupee surrenders half of its early gains against the US Dollar ahead of US-China trade talks.
  • Slightly better-than-projected US NFP data supported the US Dollar on Friday.
  • The RBI front-loaded interest rate cuts to accelerate economic growth.

The Indian Rupee gives back half of its early gains against the US Dollar (USD) during the European session on Monday. The USD/INR pair rebounds to near 85.65 from the day's low of 85.45 as the Indian currency faces selling pressure.

Meanwhile, the US Dollar is broadly underperforming its peers, with investors focusing on trade negotiations between the United States (US) and China in London later in the day.

The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, corrects to near 98.85 after a decent upside move on Friday.

Over the weekend, US President Donald Trump confirmed in a post on Truth.Social media reports that his top negotiators will be meeting with Chinese representatives in London on June 9 for further discussions on the bilateral deal. 

“I am pleased to announce that Secretary of the Treasury Bessent, Secretary of Commerce Lutnick, and United States Trade Representative, Ambassador Greer, will be meeting in London on Monday, June 9, 2025, with Representatives of China, with reference to the Trade Deal. The meeting should go very well,” Trump wrote.

Meanwhile, Beijing has also confirmed that Chinese Vice Premier He Lifeng will meet US trade delegates during his June 8-13 visit in London, according to the Chinese Ministry of Foreign Affairs (MoFA). “The first meeting of the China-US economic and trade consultation mechanism will be held with the US during this visit,” the agency reported.

A positive outcome from the US-China trade negotiations will be favorable for the US Dollar and US assets. The two were battered during the trade war between the two nations, which followed the announcement of reciprocal tariffs by US President Trump on what is known as “Liberation Day”, which is April 2.

Daily digest market movers: Indian Rupee underperforms the majority of its peers

  • The Indian Rupee underperforms its major peers, except the US Dollar, at the start of the week. The Indian currency retraces following a strong upside move on Friday, which came after the Reserve Bank of India (RBI) announced a pro-growth monetary policy. 
  • The RBI front-loaded interest rate cuts by slashing its Repo Rate unexpectedly by 50 basis points (bps) to 5.5%. Economists had anticipated a regular 25-bps interest rate reduction. The central bank also reduced its Cash Reserve Ratio (CRR) by 100 basis points (bps), a move that would allow the banking system to increase its loan disbursement limit by Rs. 2.5 lakh crore, which was meant to be held in the liquid form.
  • RBI Governor Sanjay Malhotra stated that a larger-than-usual rate cut was the need of the hour, citing the need to prompt economic growth. “Front-loading rate cuts to support growth were felt necessary,” Malhotra said.
  • Technically, an unexpected ultra-dovish monetary policy announcement often leads to selling pressure in the domestic currency. However, the Indian Rupee gained as the RBI signaled little room for more interest rate cuts. The central bank changed its stance from “accommodative” to “neutral”, citing that there is a “limited scope” to reduce the repo rate further.
  • This week, the major trigger for the Indian Rupee will be the Consumer Price Index (CPI) data for May, which will be released on Thursday. In April, the CPI data came in at 3.16% on year-on-year. In the RBI policy announcement, the central bank revised inflation guidance for FY26 to 3.7% from 4.0% projected earlier.
  • On Friday, the US Dollar gained sharply after the Nonfarm Payrolls (NFP) report for May showed that the labor growth was slightly better than projected. The US economy added 139K fresh workers, higher than estimates of 130K. The Unemployment Rate remained steady at 4.2% and Average Hourly Earnings grew steadily by 3.9% on year.
  • However, the official employment data beat estimates by a slight margin, market experts believe that there is an underlying weakness in the labor market. Analysts at Macquarie stated that their leading indicators suggested that some cracks have started appearing in the labor market. To support their claim, analysts stated that the jobless rate remained steady as the participation rate contracted.
  • After the US NFP data, US President Trump criticized the Federal Reserve (Fed) again for not lowering interest rates. “Too late at the Fed is a disaster! Europe has had 10 rate cuts, we have had none. Despite him, our Country is doing great. Go for a full point, Rocket Fuel!, Trump wrote on Truth Social.

Indian Rupee PRICE Today

The table below shows the percentage change of Indian Rupee (INR) against listed major currencies today. Indian Rupee was the strongest against the US Dollar.

USD EUR GBP JPY CAD AUD NZD INR
USD -0.34% -0.36% -0.59% -0.17% -0.50% -0.73% -0.13%
EUR 0.34% -0.04% -0.26% 0.15% -0.15% -0.41% 0.30%
GBP 0.36% 0.04% -0.16% 0.20% -0.10% -0.37% 0.16%
JPY 0.59% 0.26% 0.16% 0.44% 0.03% -0.21% 0.81%
CAD 0.17% -0.15% -0.20% -0.44% -0.35% -0.57% 0.35%
AUD 0.50% 0.15% 0.10% -0.03% 0.35% -0.27% 0.68%
NZD 0.73% 0.41% 0.37% 0.21% 0.57% 0.27% 0.60%
INR 0.13% -0.30% -0.16% -0.81% -0.35% -0.68% -0.60%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Indian Rupee from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent INR (base)/USD (quote).

Technical Analysis: USD/INR finds cushion near 20-day EMA

The USD/INR pair bounces back after attracting bids near the 20-day Exponential Moving Average (EMA), which trades around 85.48. However, the pair is still 0.15% down to near 85.65 during European trading hours.

The 14-day Relative Strength Index (RSI) wobbles around 60.00. A fresh bullish momentum would come into action if the RSI breaks above that level.

Looking down, the June 3 low of 85.30 is a key support level for the major. A downside break below the same could expose it to the May 26 low of 84.78. On the upside, the pair could revisit an over 11-week high around 86.70 after breaking above the May 22 high of 86.10.

US Dollar FAQs

The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.

The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.

In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.

Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.

Source: Fxstreet