Rupee Firm as Dollar Softens and Oil Rally Tests Sentiment

Key Moments

Rupee Strengthens Against Dollar Despite Oil Spike

The Indian Rupee (INR) is trading modestly stronger against the US Dollar (USD) in Wednesday’s opening session, with USD/INR edging down toward the 95.00 level. The move comes even as renewed geopolitical tensions have driven oil prices higher following United States (US) attacks on Iran.

In early trade, the MCX Crude Oil futures contract expiring on July 20 is up 2.62% and quoted near 6,882, building on an almost 2.35% advance on Tuesday. Such price moves typically pressure currencies of major oil-importing economies like India, which often underperform when crude costs rise sharply.

Geopolitical Tensions Rise After US Strikes

The US Central Command reported via a post on X that it carried out significant strikes on Iranian military infrastructure in response to attacks on commercial vessels transiting the Strait of Hormuz. This key waterway is described as a chokepoint for nearly 20% of global energy supply.

Tehran stated that its actions targeted ships that crossed the chokepoint without its authorization. However, the US, Qatar, and Saudi Arabia have all held Iran responsible for the attacks on these vessels.

Amid the escalating rhetoric, Iran’s top negotiator Mohammad Bagher Ghalibaf accused the US of breaching the Memorandum of Understanding (MoU) that was signed to end the conflict and warned that Iran would not retreat. “The era of bullying and extortion is over. It leads nowhere. We don’t fold,” Ghalibaf wrote on X.

Dollar Soft Ahead of FOMC Minutes

In late Asian trading, the US Dollar Index (DXY), which measures the Greenback against a basket of six major currencies, is trading on the back foot around 101.10. The US currency is expected to remain broadly rangebound ahead of the release of the Federal Open Market Committee (FOMC) minutes from the June policy meeting, scheduled for 18:00 GMT.

Market participants will be scrutinizing the minutes to understand why policymakers refrained from offering guidance on the future path of monetary policy. During the press conference following the policy decision, Fed Chair Kevin Warsh stated that forward-looking commentary is not well-suited to the current policy environment.

Foreign Investors Extend Buying Streak in Indian Equities

Foreign Institutional Investors (FIIs) have continued to add to their positions in Indian equities, marking three straight sessions of net buying through Tuesday. Over these three sessions, overseas investors have invested a total of Rs. 1,991.55 crore.

The renewed risk appetite ahead of the Q1FY27 earnings season signals improving sentiment toward Indian stocks and reflects optimism about upcoming quarterly earnings growth.

USD/INR Technical Picture: Testing Key Average and Pattern

USD/INR is trading lower around 95.00, with the pair showing a neutral bias as spot prices have retreated back toward the 20-day Exponential Moving Average (EMA), currently at 95.00. This area also marks a retest of the breakout zone from a Descending Triangle pattern.

The 14-day Relative Strength Index (RSI) is hovering near 51, indicating neutral momentum that does not yet signal overbought conditions or strong downside pressure.

On the downside, immediate support is defined by the 20-day EMA at 95.00. A decisive move below this level would bring the May 7 low at 94.03 into view. On the upside, a more substantial resistance level is located near the initial descending trendline origin around 97, where a sustained break would clear the way for a more pronounced bullish extension in USD/INR.