Rupee Drops as Strong Dollar Overpowers Softer Oil Support

Key Moments

USD/INR climbed toward 95.50 after hitting a 10-day low of 95.40 on Tuesday, despite lower crude prices.
Meanwhile, the US Dollar Index held near 99.15 as July PCE inflation data signaled persistent price pressures.
Additionally, a revenue-sharing deal on the Strait of Hormuz between Iran’s IRGC and Oman pressured oil prices, which supported energy-importing currencies like the INR.

Dollar Strength Offsets Oil-Linked Support for INR

The Indian Rupee traded weaker against the US Dollar on Thursday. This decline followed a local market holiday on Wednesday. Subsequently, the USD/INR pair recovered to around 95.50 from its Tuesday low of 95.40. Initially, traders expected the Rupee to open stronger due to softer crude oil prices. However, renewed demand for the US Dollar dominated price action following Wednesday’s US Personal Consumption Expenditure (PCE) Price Index report.

Currently, the US Dollar Index (DXY) holds close to Wednesday’s advance near 99.15. The index tracks the greenback against a basket of six major currencies.

US PCE Data Underscores Sticky Inflation

On Wednesday, the US Bureau of Economic Analysis released fresh inflation data. Core PCE inflation matched market expectations and the previous reading at 3.3% Year-on-Year. Federal Reserve officials closely monitor this specific gauge. Furthermore, the headline PCE Price Index rose 3.7% Year-on-Year. This steady pace surprised analysts who projected a slowdown to 3.6%.

Consequently, persistent price pressures keep expectations of additional Fed rate hikes alive this year. Nevertheless, market expectations for the September policy decision remained stable after the release.

According to the CME FedWatch tool, traders price a 64% chance that the Fed will hold rates unchanged in September.

Jackson Hole Symposium in Focus

Next, global markets turn their attention to Federal Reserve Chairman Kevin Warsh’s upcoming speech at the Jackson Hole Symposium.

Strategists at DBS highlighted Chairman Warsh’s Friday keynote as the week’s primary event. However, they emphasized that markets view the gathering as a test of credibility rather than a rate-signaling event.

In addition, they noted that Warsh faces a delicate balancing act. Specifically, he must defend Fed independence and price stability while clarifying policy without giving explicit forward guidance.

Hormuz Agreement Pressures Crude, Aids Importers

Meanwhile, oil prices fell after the Islamic Revolutionary Guard Corps announced a deal with Oman regarding the Strait of Hormuz. This critical waterway handles nearly one-fifth of global energy flows.

However, the IRGC clarified that fully reopening the strait requires agreements beyond this bilateral deal.

As a result, the September MCX Crude Oil futures contract fell 1.5% in early trade to Rs. 7,775.

Lower crude prices typically support heavy energy importers like India, as reduced import costs ease trade pressures.

Contract	Expiry	Session Move	Price (Rs.)
MCX Crude Oil	September 21	-1.5%	7,775 (around)

USD/INR Technical Picture

On the daily chart, USD/INR trades near 95.50. Price action around the 20-period EMA at 95.5543 and a consolidating triangle pattern signal declining volatility. Therefore, the pair appears bound for a short-term sideways phase.

Simultaneously, the 14-period Relative Strength Index oscillates between 40.00 and 60.00, confirming a lack of directional momentum.

On the upside, initial resistance lies at the 20-period EMA near 95.55, followed by the downward trendline break area at 96.5178. Conversely, immediate support rests at the rising trendline near 95.40. Below that level, key support sits near 94.16, where buyers previously stepped in to defend the uptrend.

Economic Indicator: Fed Chair Warsh Speech

Kevin Warsh took office as Federal Reserve Chairman in May 2026 for a four-year term ending in 2030. His governor term extends through May 2040. Born in Albany, New York, in 1970, the former financier and attorney previously served as a Fed Governor from 2006 to 2011, actively shaping the response to the 2008 financial crisis.