USD/INR Tests 96.10 Level as Crude & Strong Dollar Rule

Key Moments

Rupee Retreats as Oil and Dollar Advance

The Indian Rupee (INR) continues to lose ground against the US Dollar (USD) on Thursday, pushing the USD/INR pair close to 95.90. The domestic currency faces renewed pressure as oil prices recover and sustained expectations of additional Federal Reserve (Fed) interest rate hikes underpin the Greenback.

At the time of writing, the MCX crude oil futures contract expiring on October 19 is trading about 1% higher, around Rs. 8,900, after paring earlier declines. The contract had previously fallen to a new two-week low near Rs. 8,496 before rebounding.

The broader US Dollar remains firm as well. The US Dollar Index (DXY) – a measure of the currency against six major peers – is trading near an eight-week high of 101.23 at press time.

Geopolitical Tensions Support Oil Prices

Crude prices are drawing support from comments by Iranian President Masoud Pezeshkian at the United Nations General Assembly on Wednesday, where he pledged that the Islamic Republic would not yield to the United States.

“They have tested the strength and the steadfastness of Iran and they have learned that Iran cannot be made to surrender,” Iranian President Pezeshkian said.

His remarks followed comments from US President Trump, who said Washington has primarily two options – either reach a deal with Iran or annihilate the nation – dampening expectations for an agreement after the Mid-term elections.

For economies that are heavily dependent on imported energy, such as India, a rise in crude prices tends to be negative for their currencies, as it can worsen trade balances and increase external funding needs.

Fed Hawkishness Keeps Dollar in Demand

The US Dollar has been outperforming major counterparts for nearly two weeks, with markets increasingly confident that the Fed will continue raising rates this year, even after its most recent policy move.

Strategists at ING underscore that the Fed narrative remains central and that ongoing hawkish commentary from policymakers is sufficient to sustain demand for the USD. They highlight remarks from Richmond Fed President Thomas Barkin, who “reinforced that message on Tuesday, arguing that a single rate hike may not be enough to bring inflation under control.” ING adds that Barkin “also noted that resilient labour market conditions should keep consumer spending supported, implying that a dovish shift among the hawks may require clearer signs of labour market softening.”

Stronger-than-expected preliminary US S&P Global Purchasing Managers’s Index (PMI) readings are also aligning with the view of more tightening.

The latest report showed faster growth in both services and manufacturing activity. The Services PMI came in at 58.7, up from 56.5 in August and better than expectations for a decline to 56.0. The Manufacturing PMI rose to 57.0 from 53.9 previously, defying forecasts for a drop to 53.5.

USD/INR Technical Picture

On the daily chart, USD/INR is trading around 95.90. The pair is holding above the 20-period exponential moving average (EMA) at 95.5722, maintaining a bullish short-term bias as the price extends its rebound from last week’s lows. Momentum indicators back this constructive setup, with the Relative Strength Index (RSI) at 59.7, which is in positive territory but still below overbought thresholds.

On the downside, immediate support is located at the 20-period EMA around 95.57. As long as this level holds, it reinforces the positive technical backdrop. On the upside, the first key resistance is at the September 17 high of 96.10. A clear break above 96.10 could open the door for a move toward the all-time high near 97.00, with the odds of a retest increasing once that resistance is decisively cleared.