Early on Thursday, USD/INR continues to make gains despite a weakness in the US dollar as markets grow increasingly worried about the surge in coronavirus infections across India and its possible economic impact. At the time of writing, USD/INR is trading around 75.17, close to the highest levels seen since a month.

Analysts foresee the depreciation of the Indian rupee against the dollar to become more pronounced in the near term as the emerging economy tries to battle the second wave of the pandemic, which is expected to be more severe. Government officials have already ruled out the possibility of imposing complete lockdowns as the economy cannot afford to shut down like it did last year.

Despite the sharp increase in fresh cases, India’s COVID-19 vaccine drive also appears to be slowing down. India now stands just below the US in terms of having the highest number of recorded coronavirus cases worldwide and even though it has the fastest vaccination drive, a recent shortage of raw materials have hampered production and supply of more doses around the country.

Even as the fundamentals point to more upside for the USD/INR currency pair, in line with our previous forecast,  in the face of the worsening crisis across India and economic recovery across the US, technical analysis also indicates more room for bullish moves. The price is already approaching its next immediate resistance at 75.76 while the MACD indicator also indicates a bullish bias about to begin soon.