(MENAFN- Daily Forex)

• USD/INR briefly attempted to rally before fading, with the 88.50 zone emerging as key support due to prior reactions, the 50-day EMA, and an uptrend line.
• Despite double-top concerns, RBI intervention and broader dollar strength keep the pair grinding higher.

The US dollar tried to rally just a bit during the early hours on Tuesday but gave back the gains pretty quickly against the Indian rupee. The US dollar has been fairly strong against most currencies around the world, and of course, the Indian rupee wouldn't be any different, but there's also the possibility that the pair is going to have to drop and find the 88.50 rupee level for support.

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The 88.50 level has been important a couple of times in the past, and as a result, it's worth watching because not only do we have the area with a lot of market memory, but we also have the 50-day EMA underneath right along with the uptrend line that all come into the picture. While this chart could at first glance look like a double top, I don't think that's the case because you have to understand that this is a pair that is very sluggish, as the Reserve Bank of India is notorious for intervening in this market to smooth out the exchange rate Deal Can Help

A trade deal between the Indian government and the United States is seen as a potential catalyst for the rupee by improving its export products and reducing structural vulnerabilities. That being said, I don't think that's in play at the moment, but that's something to keep an eye on.

Most of what we are seeing here is the US dollar playing out its strength against the rupee and perhaps the RBI doing what it can to save the rupee's purchasing power. It looks like the 89 rupee level is a major barrier to overcome, and it's worth noting that it's very rare for this pair to really launch. I think at this point, it's more of a grind to the upside.

But I also look at this as a market that is likely to see a lot of buyers willing to step in and try to pick up a little bit of value as time goes on. Ironically, despite what people believe, there is a massive US dollar shortage at the moment in the Eurodollar system, and that will play out against some of the smaller currencies like this one.

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