- The Indian Rupee recovers slightly from its record lows of around 95.35 against the US Dollar.
- Oil prices hit a fresh over seven-week high as US President Trump vows to prolong the blockade on Iran.
- More Fed members call for a shift from easing bias.
The Indian Rupee (INR) claws back some of its early losses against the US Dollar (USD) during afternoon market hours in India on Thursday after plummeting to record lows. The USD/INR pair corrects slightly to near 95.10 as the US Dollar turns upside down, but is still close to its all-time high 95.35. The pair rallied in the opening as oil prices gained sharply, following remarks from United States (US) President Donald Trump that Washington’s naval blockade on Iran will remain intact.
Trump warns prolong naval blockade on Iran
On late Wednesday, US President Trump announced that he has rejected the recent peace proposal from Iran to reopen the Strait of Hormuz, a vital passage for almost 20% of global energy supply, whose closure has prompted the supply crisis and has boosted oil prices, which could have delayed negotiations regarding Tehran’s nuclear ambitions.
US President Trump said that Washington will continue the naval blockade of Iran until he secures a deal with Tehran to address the country’s nuclear program.
At the press time, the WTI Oil price ticks lower to near $105.00 after facing slight profit booking near its fresh over seven-week high of $107.35 posted earlier in the day.
Currencies from economies, such as India that rely heavily on oil imports to meet their energy needs, tend to underperform in a high oil price environment.
Fed sees current policy stance as appropriate
The US Dollar gives back its early losses and slides lower; however, its outlook remains upbeat, following remarks from Fed Chair Jerome Powell that the “number of officials who would support a move away from an easing bias has increased”.
As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.18% lower to near 98.80.
On Wednesday, the Fed left interest rates steady in the range of 3.50%-3.75%, with an 8-4 majority. One member dissented in favor of a rate cut, while three dissented against the inclusion of an easing bias, according to the monetary policy statement.
In the press conference, Fed Chair Powell warned that the central bank is vigilant to “risks on both sides of our mandate”, adding, “Developments in the Middle East are contributing to uncertainty.”
FIIs continue to dump their stake in Indian stock market
Foreign Institutional Investors (FIIs) remain net sellers in the Indian stock market amid surging oil prices, which have raised concerns about India Inc.’s earnings projections. Overseas investors have remained net sellers in all previous eight trading days, and have offloaded their stake worth Rs. 22,863.50
Technical Analysis: USD/INR sees more upside towards 96.00
USD/INR posts a fresh all-time high near 95.35 during the day on Thursday. The pair holds a firm bullish bias as spot remains well above the 20-period Exponential Moving Average (EMA) at 93.83, keeping the short-term uptrend intact.
The Relative Strength Index (RSI) hovers near 65.77, indicating strong but not yet extreme upside momentum, which suggests buyers still retain control, though the risk of overextension is building.
On the downside, initial support is aligned with the 20-EMA around 93.81, where a deeper pullback would be expected to attract dip buyers and maintain the broader advance while it holds. A daily close below this dynamic floor would hint at fading upside pressure and open the door to a more extended correction toward prior price congestion levels not yet tested in the current leg. Looking up, the price has entered uncharted territory and will likely extend its rally towards 96.00.
