• USD/INR looks vulnerable on New Year Eve amid a four-day downtrend.
• US dollar index is holding the higher ground, courtesy of year-end flows.
• The daily technical setup suggests more pain for the USD/INR pair.

USD/INR is fluctuating between gains and losses on the final trading day of 2021, as it wavers near the midpoint of the 74.00 level.

The pair is looking to extend its four-day losing streak, despite the rebound in the US dollar across the board, as the daily technical setup suggests more room for the downside.

At the time of writing, the spot is trading almost unchanged on the day, pressuring lows near 74.40.

“A number of traders and corporates have been wrong-footed by what has been an unprecedented finish to the year for the rupee. A move above 74.50 was never on the cards. The RBI likely helped the rupee when it fell to below 76, and from there, the dollar has been in a free fall. The pair has shown little respect to key support levels or to momentum indicators that it is highly oversold,” Reuters reports, citing a dealer at a private bank.

Technically, USD/INR remains vulnerable, having breached the 100-Daily Moving Average (DMA), now at 74.53, on a daily closing basis.

The 14-day Relative Strength Index (RSI) is heading towards the oversold region, backing the bearish potential in the price.

Sellers target the 200-DMA support at 74.25, which will be the line in the sand for USD/INR buyers.

USD/INR: Daily chart

For any meaningful recovery to kick in, the spot needs to recapture the 100-DMA on a sustained basis.

Acceptance above the latter will call for a fresh advance towards the 75.00 level.

USD/INR: Additional levels