USD/INR Price Forecast: The support area at 85.25 is coming into focus

• The US Dollar is extending its reversal from $86.00 for the fourth day in a row.
• The tepid reaction to the US-China deal and investors' caution ahead of the US CPI are supporting the Rupee.
• USD/INR is approaching a key support area at 85.25-85.35.

The Indian Rupee is trading higher for the fifth consecutive day on Wednesday. The US Dollar-supportive impact from the US-China deal has been short-lived, and the pair resumed its downward trend ahead of the US CPI release, nearing the support area at 85.25-85.35.

US and China agreed on a framework to de-escalate their trade rift and return to the Geneva meeting consensus, that is, fewer restrictions for rare earths' trade and lower tariffs. The lack of details about the agreement, however, has triggered a sceptical market reaction.

The Dollar ticked up after the news before losing ground during the US Session, with investors cautious ahead of the release of US CPI data and a key auction of US Treasury bonds due later today.

Technical analysis: USD/INR bears remain in control

The USD/INR keeps correcting lower from the 86.00 peak hit last week, likely to extend losses towards the key 85.25-85.35 area, where the lows of May 28 and 30 and June 2 meet the ascending trendline support from early May lows.

The pair is moving in an ascending triangle pattern, which is a bullish formation, but technical indicators are pointing lower, and the confirmation below the mentioned levels would increase negative pressure towards 84.77 (May 26 and 27 lows), ahead of the 12 May low, at 84.25.

On the upside, a break above $86.00 to mark a trend shift and set its focus towards the April 9 high, at 86.90.

USD/INR 4-Hour Chart