INR

• Indian Rupee may face challenges following the RBI’s decision to end its FCNR deposit FX swap early.
• USD/INR is projected to trade between 95.00 and 95.50 this week amid expected pre-August 31 FCNR deposit demand.
• The US Dollar declines as weaker-than-expected US economic data fade Fed rate hike odds.

The Indian Rupee (INR) trades stronger against the US Dollar (USD) on Monday after two days of losses, with the USD/INR pair trading around 95.50 at the time of writing. However, the Indian Rupee (INR) may struggle in the coming period, potentially driving the pair higher, following the Reserve Bank of India’s (RBI) announcement to shut its FX swap facility for FCNR deposits a month ahead of schedule. Data released alongside the decision highlighted that the central bank’s policy measures, including the deposit swap window, successfully attracted nearly $57 billion.

Market traders expect the USD/INR pair to fluctuate between 95.00 and 95.50 this week. Some anticipate a short-term rush among overseas clients aiming to secure FX deposits before the facility officially closes on August 31, while foreign portfolio flows and routine hedging activity will further direct currency movement.

Investors will closely monitor the release of the minutes from the RBI’s August policy meeting, during which interest rates were kept unchanged. Looking ahead, most analysts project that the RBI will either initiate a shallow rate-hiking cycle starting in December or maintain its pause across the remainder of 2026.

India inflation uptick supports RBI’s steady policy stance

Analysts at Societe Generale highlight that India’s inflation backdrop remains broadly contained, noting that headline CPI “edged up modestly to 4.45% yoy in July from 4.38% in June,” a move they say “reinforc[es] the latest decision by the RBI to keep policy on hold.”

The USD/INR pair holds losses as the US Dollar (USD) declines amid weaker-than-expected US economic data and shifting central bank expectations. The US Census Bureau reported on Friday that Retail Sales fell by 0.6% month-over-month in July, following a 0.2% rise in June, coming in below the market consensus of 0.1% growth. On an annual basis, Retail Sales rose 5.0% in July compared to 6.8% in the previous month.

Traders have reduced their bets on Federal Reserve rate hikes following a slew of softer US data, including CPI, PPI, and Retail Sales. Markets are now pricing in a 33.1% chance of a rate hike next month, down from 44% last week according to the CME FedWatch tool.

Fed seen keeping hawks in check as disinflation evidence builds

Strategists at Scotiabank argue that last week’s data have likely provided sufficient reassurance on the inflation front to justify a more patient stance from policymakers. They highlight that “there is likely to have been enough evidence of disinflation in last week’s data (along with signs of slowing in the labour market) to allow Fed Chairman Warsh to keep the inflation hawks at bay,” reinforcing expectations that the Fed can resist pressure for an early shift back toward a more aggressive tightening bias.

Technical Analysis: USD/INR remains above moving averages within ascending channel

USD/INR holds losses after two days of gains, trading around 95.50 at the time of writing. The technical analysis of the daily chart indicates that the pair is remaining within the ascending channel, suggesting a prevailing bullish bias.

Additionally, the USD/INR pair holds a slight constructive bias as spot remains above both the nine-period Exponential Moving Average (EMA) at 95.4418 and the 50-period EMA at 95.3913, suggesting near-term dips are being cushioned by dynamic support.

The 14-day Relative Strength Index (RSI) hovers just below the 50 mark at 49.2, hinting at broadly balanced momentum after the recent pullback, while the latest FXS Fed Sentiment Index reading around 134.6 adds a modestly supportive macro backdrop without yet translating into a clear directional breakout on the chart.

• The Indian Rupee ticks lower against the US Dollar as the latter holds on to Wednesday’s gains.
• The US Dollar gains despite an expected slowdown in the US CPI data for July.
• Oil prices recover opening gains amid prolonged Hormuz closure.

The Indian Rupee (INR) opens on a cautious note against the US Dollar (USD) on Thursday due to overnight gains in the latter. The USD/INR pair edges up to near 95.35 after a corrective move the previous day, as fears of a prolonged global energy supply disruption have strengthened the US Dollar.

As of writing, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades firmly near Wednesday’s high at 100.00.

Investors doubt sustainability of US Dollar’s recovery

Though the US Dollar is outperforming its peers as continued Middle East tensions have increased its safe-haven demand, easing fears of a near-term Federal Reserve (Fed) interest rate hike due to an expected slowdown in the United States (US) Consumer Price Index (CPI) growth in July have raised concerns over its strength.

According to TD Securities, the July US CPI report “should continue to bring relief to the Fed regarding the need for tighter policy, at least in the near horizon.” The bank points to “signs of normalization in services prices along with tariff pass-through that remains under control” as factors that “bode well for concerns around sticky core inflation.” On that basis, TD Securities reiterates that “we remain of the view that the Fed will keep its policy stance unchanged this year.”

In terms of market reaction, TD Securities notes that “markets remain relatively unchanged in the wake of the July report, with the pricing for a hike in the September meeting still sitting just under 50%.

Oil prices bounce back

The absence of progress in US-Iran negotiations on the reopening of the Strait of Hormuz, a critical chokepoint for almost 20% of global energy supply, has staged a strong recovery in oil prices.

In the opening trade, the MCX Crude Oil contract expiring on August 19 trades almost flat at around Rs. 7,920 after a weak opening, tracking losses in global oil prices.

Currencies from economies, such as India, which rely heavily on oil imports to meet their energy needs, tend to underperform in a high-oil-price environment.

On Wednesday, oil prices faced sharp selling pressure as OPEC revised its global oil demand growth forecast for the current year to 580,000 barrels per day (bpd) from the previous forecast of 780,000 bpd.

India’s retail CPI accelerates in July

Inflation in India at the retail level accelerated to 4.45% Year-on-Year (YoY) in July from 4.38% in June, almost in line with estimates of 4.50%. The retail CPI remains within the Reserve Bank of India’s (RBI) tolerance band of 2%-6%.

Technical Analysis: USD/INR holds advancing trendline

USD/INR trades at around 95.35, keeping a mild bearish near-term bias as it holds below the 20-period Exponential Moving Average (EMA) at 95.50. Price action remains under this short-term trend proxy, suggesting rallies are capped for now, while the Relative Strength Index (14) at 46.74 stays in neutral-to-soft territory, hinting at lacklustre bullish momentum rather than a decisive selloff.

On the downside, initial support is aligned with the former break point of the rising trend line at 95.30, which now acts as an underlying floor for the pair; below that, the August 5 low at 94.83 is the critical support level. On the topside, a recovery would first need to clear the 20-period EMA at 95.50 to ease bearish pressure, with a sustained move above this level required to shift the bias towards a more constructive stance. Looking up, the 96.00 level would be the next hurdle for the pair.

• The Indian Rupee declines further against the US Dollar due to rising oil prices.
• Traffic through the Hormuz has declined significantly.
• Investors keenly await the India-US CPI data for July.

The Indian Rupee (INR) extends its decline against the US Dollar (USD) on Wednesday as the former continues to face pressure due to surging oil prices.

At press time, USD/INR trades slightly higher to near 95.45. The MCX Crude Oil contract expiring on August 19 trades 0.6% higher to near Rs. 8,000.

Currencies from economies, such as India, which rely heavily on oil imports to meet their energy needs, tend to underperform in a high-oil-price environment.

Restricted energy supply continues to boost oil prices

A prolonged oil supply disruption due to the closure of the Strait of Hormuz, a critical chokepoint to almost one-fifth of global energy supply, amid tensions between the United States (US) and Iran continues to boost oil prices.

According to data from Kpler, shipping traffic through the Strait of Hormuz, a vital passage to almost 20% of global energy supply, was recorded at just six vessels on August 10, down from a recent 10-day average of about 11. This remains a massive decline from pre-war levels of 130 to 140 ships daily, Reuters reports.

Meanwhile, mediators from Pakistan have expressed optimism regarding progress in negotiations between the US and Iran. Pakistan’s Defence Minister, Khawaja Asif told reporters that “things are shaping up again in favor of a peace arrangement or a deal, according to Bloomberg.

India-US CPI data awaited

In Wednesday’s session, major triggers for the USD/INR pair will be the Consumer Price Index (CPI) data for July of both India and the US.

India’s retail CPI data is scheduled to be released at 04:00 PM (10:30 GMT). Economists at DBS Group Research note that key “inflation numbers are due in the second week of August,” with “headline inflation in July… largely steady at 4.4% YoY vs June.” They point out that high-frequency indicators for food staples “point to a rise in pulses, sugar, milk and edible oils, while vegetables have stabilized,” adding that “a catch-up in rainfall in July has helped boost sowing activity.”

DBS also highlights that “adjustments in domestic retail fuel products (non-subsidized LPG was up 10% YoY in July) are also likely to reflect in the utilities and fuel segments.” Even so, the bank expects underlying price pressures to remain contained, with “core readings… benign at sub-4% in July, helped also by moderation in precious metals in the period.”

The major highlight will be the US inflation data, which is expected to have a significant influence on the Federal Reserve’s (Fed) monetary policy outlook. In the July policy meeting, remarks from Fed Chairman Kevin Warsh clearly showed that officials are heavily concerned regarding inflationary pressures remaining well above the central bank’s 2% target for a long period.

US inflation seen firming but not reaccelerating in July

Brown Brothers Harriman’s Elias Haddad expects the upcoming US July CPI report to show inflation “firm modestly but stop short of signaling a renewed acceleration in inflation.” He notes that “headline CPI is expected to rise +0.1% m/m vs. -0.4% in June and ease to 3.4% y/y vs. 3.5% in June,” while “core CPI is expected to rise +0.2% m/m vs. 0.0% in June and ease to 2.5% y/y vs. 2.6% in June.” Haddad argues that such a profile would underscore a gradual disinflation trend rather than a renewed pickup in price pressures.

Technical Analysis: USD/INR recovers to near 95.40

USD/INR is inching closer to the 20-day exponential moving average (EMA) at 95.52, which is above the price, hinting at a shift in the near-term bias from bearish to neutral.

The Relative Strength Index (14) around 48 hints at soft, range-bound momentum rather than aggressive selling pressure.

On the topside, immediate resistance is located at the 20-day EMA near 95.52, which would need to be decisively reclaimed to ease the current downside bias and open the way for a further recovery move toward 96.00. Looking down, key support zones are the August 5 low at 94.83 and the June low at 94.15.

• The Indian Rupee falls further against the US Dollar as oil prices extend the advance.
• US President Trump demands reparations for the war, as Iran did the same.
• Investors await the CPI data for July from both India and the US.

The Indian Rupee (INR) opens on a cautious note against the US Dollar (USD) on Tuesday. The USD/INR pair rises further to near 95.40 as surging oil prices due to escalating fears of a prolonged global supply disruption have weakened the Indian currency.

In the opening session, the MCX Crude Oil contract expiring on August 19 trades 0.45% higher to near Rs. 7,835, closer to its weekly high.

Trump also demands reparations for war

On Monday, United States (US) President Donald Trump also demanded compensation for war casualties in the Middle East from Iran, through a post on Truth Social, in a direct answer to Iran’s own call for compensation, as a key condition for reopening the Strait of Hormuz, a vital passage to almost one-fifth of global energy supply.

US President Trump added that Iran should be held “responsible for the damages and death” caused to the people of Lebanon, Syria, Yemen and Gaza.

Over the weekend, Iran’s Mohammad Bagher Zolghadr, secretary of the council, set out six conditions for the Hormuz reopening.

Both sides demanding compensation for war damages have heightened uncertainty over the truce in the near term, boosting oil prices.

Currencies from economies, such as India, which rely heavily on oil imports to meet their energy needs, tend to underperform in a high-oil-price environment.

India-US CPI data comes under the spotlight

This week, the major trigger for the Indian Rupee and the US Dollar will be respective Consumer Price Index (CPI) data for July from their economies, which will be released on Wednesday.

India inflation holds steady as DBS flags mixed food trends and benign core

Economists at DBS Group Research note that key “inflation and trade numbers are due in the second week of August,” with “headline inflation in July… largely steady at 4.4% YoY vs June.” They point out that “high frequency data on food staples point to a rise in pulses, sugar, milk and edible oils, while vegetables have stabilized,” adding that “a catch-up in rainfall in July has helped boost sowing activity.” On the price side, DBS highlights that “adjustments in domestic retail fuel products (non-subsidized LPG was up 10% YoY in July) are also likely to reflect in the utilities and fuel segments.” Even so, they expect underlying pressures to remain contained, with “core readings… benign at sub-4% in July, helped also by moderation in precious metals in the period.”

In the US, both headline and core CPI are expected to have cooled down, with figures seen arriving lower at 3.4% and 2.5% Year-on-Year (YoY), respectively.

Signs of US inflationary pressures cooling down would ease fears of Federal Reserve (Fed) interest rate hikes further. This week, financial markets have rolled back hawkish Fed after the release of the US Nonfarm Payrolls (NFP) data for July, which showed a reduction in the overall labor force against estimates of a fresh addition of 80K workers.

Technical Analysis: USD/INR holds key 60-day EMA

In the daily chart, USD/INR trades at 95.40. The pair holds above the 60-day exponential moving average (EMA) at 95.26, keeping a modest bullish near-term bias as price respects this dynamic support zone.

Momentum is less conclusive, with the 14-day Relative Strength Index (RSI) hovering near 47, hinting at a consolidative tone rather than strong directional conviction, but the preservation of levels above the EMA favors mild upside while this floor holds.

On the downside, initial support is seen at the 60-day EMA at 95.26, followed by the June 26 low at 94.15. With no clearly defined overhead technical barriers in the immediate dataset, any sustained advance above the recent close would likely be driven by momentum shifts, while a daily close back below 95.2616 would weaken the current constructive bias and expose a broader corrective phase.

• The Indian Rupee trades slightly lower at around 95.27 against the US Dollar as the US NFP takes center stage.
• Weak US ADP Employment Change data has set a negative tone for the US NFP.
• Oil prices bounce back amid fears of escalation in internal Middle East war.

The Indian Rupee (INR) falls slightly against the US Dollar (USD) on Friday in the countdown to the United States (US) Nonfarm Payrolls (NFP) data for July at 06:00 PM IST or 12:30 GMT. The USD/INR pair rises to near 95.27, with investors awaiting the US NFP to get cues regarding the current status of the labor market.

Ahead of the US NFP, weak ADP Employment Change data for July has established a cautious backdrop for the official employment data.

ADP slowdown reinforces expectations for softer US payrolls

According to TD Securities, July ADP employment data “surprised to the downside, moderating to 44k (TD: 50k, cons: 65k).” While the bank stresses that it does “not put much weight on ADP when it comes to m/m moves in NFP,” it notes that “the trend in the data is in line with what we are expecting.” TD highlights that “both the monthly and weekly ADP data have moderated this summer after a strong start to the year,” and suggests that “a similar trend is likely to occur with NFP job gains.”

According to NFP estimates, the US economy created 80K fresh jobs, higher than 57K in June. The Unemployment Rate is seen as steady at 4.2%. Average Hourly Earnings, a key measure of wage growth, is expected to have grown at a steady pace of 0.3% and 3.5% on a monthly and yearly basis, respectively.

The wage growth measure, which provides cues about the inflation outlook, could prove to be a major driver for the US Dollar’s next move, compared to the job data, as policymakers signaled in July’s Fed monetary policy statement that they are increasingly concerned about inflation remaining well above the 2% target. Also, Chairman Kevin Warsh said that the central bank “won’t hesitate to act” if needed to tame elevated price pressures.

Currently, the CME FedWatch tool shows a 54.5% chance that the Fed will raise interest rates in the September policy meeting.

Oil prices recover on internal Middle East conflicts risk

Oil prices have regained ground after a significant plunge in the last two weeks. Rising friction between Iran-aligned Houthis and Saudi Arabia has increased risks of internal war in the Middle East at a time when Iran and the US have just reached a temporary ceasefire, and has promoted fears of a prolonged energy supply disruption.

According to a report from The Guardian, Saudi Arabia is stepping up its attacks on Houthis in retaliation for striking Yemeni government troops and Najran province.

At press time, the MCX Crude Oil contract expiring on August 19 trades 1.13% higher at around Rs. 7,460.

Currencies from economies, such as India, which rely heavily on oil imports to meet their energy needs, tend to underperform in a high-oil-price environment.

Technical Analysis: USD/INR aims to return to 20-day EMA

USD/INR trades at around 95.27, retaining a mildly bearish near-term bias as spot holds below the 20-day exponential moving average (EMA) at 95.57.

The pair’s failure to reclaim this dynamic resistance hints at continued downside risk, while the Relative Strength Index (RSI) at 44.6 sits in neutral territory, suggesting selling pressure is present but not yet stretched into oversold conditions.

On the topside, the 20-day EMA at 95.57 is the first barrier that bulls would need to clear to ease the current downward tone and open the way for a more sustained recovery. Looking down, the Wednesday low at 94.83 is the key support level, followed by the June low at 94.15.