• The Indian Rupee falls back against the US Dollar after failing to capitalize on the RBI’s intervention-led support.
• Unexpectedly strong US ISM Services PMI data for December has strengthened the US Dollar.
• Investors await the US NFP data for fresh cues on the Fed’s monetary policy outlook.

The Indian Rupee (INR) opens on a subdued note against the US Dollar (USD) on Thursday after a decent upside move the previous day. The USD/INR pair rises to near 90.20 as the Indian Rupee struggles to regain ground despite the Reserve Bank of India’s (RBI) intervention on Wednesday.

Traders stated on Wednesday that the RBI sold US Dollars aggressively for the first time this year, resembling a similar action seen multiple times in 2025 to counter one-way excessive moves, Reuters reported.

The Indian Rupee seems to be failing to capitalize on RBI-led support, as Indian importers found the USD/INR correction attractive to build fresh positions. The demand for US Dollars by Indian importers has remained upbeat amid trade frictions between the United States (US) and India since mid-2025, when Washington raised tariffs on imports from New Delhi to 50% for buying oil from Russia.

This week, trade tensions between both nations have renewed as US President Donald Trump has threatened to raise tariffs on India further for not supporting Washington on the Russian oil issue.

US-India trade woes have also been a major drag on the interest of foreign investors toward the Indian equity market. Foreign Institutional Investors (FIIs) remained net sellers in eight out of 12 months in 2025. So far in January, overseas investors have sold shares worth Rs. 4,650.39 crore.

Daily Digest Market Movers: US Dollar gains on surprisingly strong US ISM Services PMI

• The upside move in the USD/INR pair is also driven by strength in the US Dollar. At the time of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades flat around 98.70, but gained on Wednesday, following the release of the surprisingly upbeat US ISM Services Purchasing Managers’ Index (PMI) data for December.
• The ISM showed on Wednesday that the Services PMI expanded at a faster pace to 54.4 from 52.6 in November, while it was expected to come in lower at 52.3, indicating that the US services sector ended 2025 on a firm note. Additionally, other components of Services PMI, such as Employment Index and New Orders Index, also outperformed.
• However, US ADP Employment Change and JOLTS Job Opening data remained weaker than projected. The ADP reported that private employers added 41K workers in December, lower than estimates of 47K. Still, numbers should be treated cautiously as 29K workers were fired in November. Meanwhile, fresh jobs posted in November were 7.15 million, lower than estimates of 7.6 million and the prior reading of 7.45 million.
• Signs of cooling labor demand could prompt traders to raise bets supporting interest rate cuts by the Federal Reserve (Fed) in its upcoming monetary policy meetings.
• To get more detailed information on the current state of the US job market, investors will focus on the Nonfarm Payrolls (NFP) data for December, which will be published on Friday. The NFP report is expected to show that the economy added 60K fresh workers, slightly lower than 64K in November. The Unemployment Rate is expected to fall to 4.5% from the prior reading of 4.6%.

Technical Analysis: USD/INR aims to hold key 20-day EMA

USD/INR moves higher to near 90.20 at the open on Thursday. The pair sits marginally below the 20-day Exponential Moving Average (EMA) at 90.2025, which has flattened and started to roll over, capping rebounds. While below that gauge, the short-term bias softens.

The 14-day Relative Strength Index (RSI) at 49 (neutral) confirms momentum has ebbed without a clear directional drive.

A daily close back above the 20-day EMA would improve momentum and could reopen a topside extension toward the all-time high of 91.55. Failure to clear that gauge keeps a drift lower in play, which might lead to a deeper retracement toward the December 19 low of 89.50.