Rupee Gains as Oil Slumps, Dollar Weakens Before Fed

Key Moments

INR Gains as Oil Prices and Dollar Retreat

The Indian Rupee (INR) continues its recovery against the US Dollar (USD) as the Federal Reserve policy week begins. USD/INR falls toward 95.90, supported by weaker crude oil prices and lower demand for the Dollar as a safe-haven asset.

Meanwhile, easing military tensions between the United States and Iran have pressured oil prices. The shift has also reduced investor demand for defensive assets. As a result, oil-importing currencies such as the Indian Rupee have gained support.

Early trading showed MCX Crude Oil futures for August 19 down 6.25%, near Rs. 8065. At the same time, the US Dollar Index (DXY) slipped 0.25% to around 101.25. The index tracks the Dollar against a basket of six major currencies.

US Dollar Performance Against Major Currencies

The US Dollar remains weaker against most major currencies. In particular, the Swiss Franc has seen the strongest gains against the Greenback. The intraday currency heat map highlights these moves across the Euro, Pound, Yen, Canadian Dollar, Australian Dollar, Indian Rupee, and Swiss Franc.

*The table reflects daily Dollar movements against major currencies. The Dollar showed its largest decline against the Swiss Franc.

The heat map uses the base currency on the left and the quote currency across the top. The percentage shows the movement of the base currency against the quote currency. For example, USD/JPY reflects the Dollar’s move against the Yen.

US-Iran Strike Pause Reduces Market Risk

Geopolitical concerns eased after a two-week exchange of strikes between the United States and Iran paused over the weekend. Washington said further action was unnecessary after reaching the limits of its current target list.

According to Axios, Adm. Bradley Cooper told President Donald Trump that the campaign had reached a point of limited effectiveness. Extending the operation would have required a return to broader combat activity.

Meanwhile, Iran stopped attacks on US bases in neighbouring countries. However, Tehran maintained its “attack for attack” position despite the pause in direct conflict.

Additionally, US ambassador to the United Nations Mike Waltz said President Trump paused further strikes to allow more time for diplomacy. This decision improved hopes for negotiations and pushed oil prices lower. It also reduced demand for the US Dollar as a safe-haven currency.

Fed Policy Meeting Takes Centre Stage

The Federal Reserve’s policy announcement remains the main focus for markets this week. The central bank is expected to keep interest rates unchanged between 3.50% and 3.75%. So far this year, the Fed has avoided major policy changes.

Investors will closely watch the policy statement and comments from Fed Chair Kevin Warsh. They want clues about inflation trends and future rate decisions. However, Warsh is unlikely to offer clear guidance on the next moves.

Technical Outlook: USD/INR Tests 20-Day EMA

USD/INR trades near 95.90 and approaches its 20-day Exponential Moving Average (EMA) at around 95.98. This level could become an important turning point for the pair.

Meanwhile, the 14-day Relative Strength Index (RSI) has fallen near 50.00. This suggests bullish momentum has weakened. Therefore, further declines remain possible if selling pressure continues.

On the downside, traders are watching the 95.00 area if USD/INR breaks below the 20-day EMA. On the upside, the 97.10 all-time high remains the key resistance level. For now, this barrier may limit any renewed Dollar recovery.