Key Moments
- The Indian Rupee weakened against the US Dollar after two sessions of gains. However, falling oil prices limited further losses.
- Analysts now expect India’s balance of payments to show a small surplus. This marks a shift from earlier deficit forecasts after recent RBI actions.
- USD/INR trades near 94.40. It sits just above key support at 94.30 within a descending triangle pattern.
Rupee Eases After Rally as Oil Slide Offers Support
The Indian Rupee (INR) fell against the US Dollar (USD) on Wednesday. It partially reversed gains from the previous two sessions.
However, losses remained limited. Falling global crude prices helped support the currency.
Economists have also adjusted their outlook for India’s external position. After recent Reserve Bank of India (RBI) measures, forecasts now point to a small balance of payments surplus instead of a deficit.
Meanwhile, investors are watching how the RBI responds to currency strength. Some analysts believe the central bank may allow a stronger rupee to reduce its foreign exchange forward positions.
In March, short-dollar positions hit a record $104 billion as policymakers supported the currency more aggressively.
Equity Markets Turn Cautious Ahead of Fed Decision
Indian equities opened higher on Wednesday. However, momentum faded as traders reduced risk ahead of the US Federal Reserve meeting.
The Fed is expected to keep rates unchanged at 3.50%–3.75%. In addition, markets expect a cautious “wait-and-see” tone.
Traders are focused on comments from Fed Chair Kevin Warsh. They expect signals about inflation and future policy direction.
Earlier in the week, foreign investors sold equities worth INR 749.18 crore. Meanwhile, domestic investors posted only small net purchases of INR 6 lakh, according to NSE data.
Global Risk Sentiment Remains Weak
Geopolitical tensions continue to weigh on global markets. At the same time, investors remain uncertain about the outlook for global growth.
Industry reports suggest that shipping and energy flows may take weeks to normalize. Therefore, risk appetite remains limited.
In the Middle East, tensions increased further after Hezbollah warned that Iran may reject a nuclear deal. This would depend on Israel withdrawing from Lebanese territory.
Oil Falls on US-Iran Deal Expectations
Oil prices extended their decline for a fifth straight session. West Texas Intermediate (WTI) traded near $75.20 per barrel.
Prices fell as markets priced in a possible US-Iran agreement. The deal could increase global oil supply.
According to reports, the two countries may sign an interim agreement in Switzerland this Friday. If completed, Iran could restart oil exports quickly.
In addition, shipping through the Strait of Hormuz could resume under safer conditions.
| Market/Instrument | Latest Level | Key Context |
|---|---|---|
| USD/INR | Around 94.40 | Trades just above key triangle support at 94.30 |
| WTI Crude | About $75.20 | Extends losses on supply expectations |
| Fed Policy Rate | 3.50%–3.75% (expected) | Markets expect steady rates with cautious guidance |
USD/INR Technical Outlook
USD/INR traded near 94.40 after two sessions of losses. The pair remains inside a descending triangle pattern.
It now tests a key support zone near 94.30. Buyers have previously defended this level.
However, technical signals remain weak. The pair trades below both the 9-day and 50-day EMAs. This suggests continued downside pressure.
In addition, the 14-day RSI sits near 40. This indicates weak momentum.
Support remains at 94.30. Meanwhile, resistance appears at 94.73 and 94.90.
Risk Sentiment Explained
Risk sentiment drives global markets. It reflects how willing investors are to take risk.
In “risk-on” conditions, equities and commodities tend to rise. In contrast, safe-haven assets like the US Dollar and Japanese Yen often gain in “risk-off” periods.
Commodity-linked currencies usually strengthen during risk-on phases. Therefore, USD/INR movements often reflect broader global sentiment shifts.
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