• The Indian Rupee gains further against the US Dollar due to lower oil prices.
• The risk premium on oil prices erodes due to hopes for US-Iran diplomacy resolution.
• US midterm elections are the next key trigger for global markets.

The Indian Rupee (INR) extends its winning streak against the US Dollar (USD) for the third trading day on Tuesday. As of writing, the USD/INR pair is down 0.15% to near 94.83.

The Indian currency strengthens as oil prices continue to face selling pressure on the back of improved hopes for United States (US)-Iran diplomatic resolution.

At press time, the MCX Crude Oil contract expiring on November 19 is up 1.65% to near Rs. 9,222, but is down almost 7.5% from its recent multi-month high of Rs. 9,972.

Oil risk premium eases as diplomacy headlines reshape market tone

According to TD Securities, recent headlines suggesting that US President Donald Trump is willing to give diplomacy more time, and “signaling attacks may not be imminent immediately before/after the midterms,” have already seen “a portion of the geopolitical risk premium priced out of crude oil and petroleum products.” The strategists add that “with flows elevated, and a large portion of recent upside attributed to a risk premium, these headlines will have an increasingly large impact on the market,” as positioning and sentiment adjust to the evolving geopolitical narrative.

However, TD Securities has cautioned that “headlines alone are unlikely to shed the whole risk premium.” TD Securities adds that “so long as there is no concrete conclusion to the war, and tanker and Houthi attacks remain prevalent, we do not anticipate a complete erosion of the risk premium via diplomacy headlines alone,” underscoring that persistent geopolitical threats continue to underpin pricing.

Lower oil prices bode well for currencies from economies, such as India, which rely heavily on oil imports to meet their energy needs.

Investors brace for US midterm elections

Strategists at Brown Brothers Harriman (BBH) note that “the US midterm elections will be held on Tuesday,” with “Democrats widely expected to win the House of Representatives.” They add that “Senate control is much closer, but the tide favors the Democratic Party,” as “Democrats need a net gain of four seats to secure a majority in the Senate” — a target that is “within reach as Republicans are defending six of the seven toss-up seats.”

BBH highlights that betting markets “favor a Democratic sweep,” with Polymarket and Kalshi “putting the odds around 70%.” In their view, that “points to a relatively muted initial market reaction if Democrats win both chambers,” whereas “a Republican Senate hold would be the bigger surprise and could spark more market volatility.”

Technical Analysis: USD/INR stays below 20-day EMA

In the daily chart, USD/INR trades at 94.83, keeping a bearish near-term tone as spot holds beneath the 20-day Exponential Moving Average (EMA) at 95.21. The pair’s position under this short-term trend gauge suggests rallies remain capped, while the Relative Strength Index (14) at 38.9 stays below the neutral 50 line, hinting at prevailing downside pressure rather than an oversold extreme.

On the topside, immediate resistance is located at the 20-day EMA at 95.21, and a daily close above this barrier would be needed to soften the current bearish bias. On the downside, the June 25 low at 94.15 is the key support level.