Indian Rupee plummets as US-Iran ceasefire collapse lifts oil prices

The Indian Rupee (INR) plunges against the US Dollar (USD) in India’s afternoon trading hours on Wednesday. The USD/INR pair jumps to near 95.65 as the collapse of the memorandum of understanding (MoU) between the United States (US) and Iran has lifted oil prices.

In the opening session, the MCX Crude Oil contract expiring on July 20 soars over 7% to near 7,200, the highest level seen in two weeks. The contract also gained almost 2.35% on Tuesday.

Currencies from economies, such as India, which rely heavily on oil imports to meet their energy needs, tend to underperform when oil prices surge.

US strikes in retaliation for attacks on commercial ships

While speaking at the NATO summit in Ankara, Türkiye, during the European session on Wednesday, US President Donald Trump said, “I think the MoU with Iran is over,” adding, “I don’t want to deal with Iran. They are sick people.”

US President Trump also criticized Iran for attacking commercial ships transiting through the Strait of Hormuz, a critical chokepoint for almost 20% of the global energy supply, on Tuesday, and stated that Washington retaliated by launching powerful attacks on Iranian military infrastructure. However, Tehran clarified that it attacked those ships for crossing the chokepoint without its approval.

US Dollar ticks down ahead of FOMC Minutes

In the late Asian trade, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades subduedly near 101.10. The US Dollar is expected to trade broadly sideways ahead of the Federal Open Market Committee (FOMC) minutes of the June policy meeting, which will be published at 18:00 GMT.

Investors will gauge what possible reasons were behind policymakers’ decision to avoid delivering remarks on the monetary policy outlook. In the policy press conference, Fed Chair Kevin Warsh said that forward-looking remarks are not well-suited in the current policy juncture.

FIIs remain net buyers for three straight trading days

Foreign Institutional Investors (FIIs) continue to increase their stake in the Indian stock market, extending the buying streak for three trading days on Tuesday. In the past three trading days, overseas investors have poured investment worth Rs. 1,991.55 crore. An improvement in sentiment of foreign investors towards Indian equities ahead of the start of the Q1FY27 earnings season underscores their optimism over quarterly earnings growth.

Technical Analysis: USD/INR corrects to near 20-day EMA

USD/INR jumps to near 95.65 at press time. The pair holds a modest bullish bias as it remains above the 20-day exponential moving average (EMA) at 95.05 and the breakout of the Descending Triangle formation.

The Relative Strength Index (14) at 56.8 stays in positive territory without overbought conditions, which suggests ongoing buying interest, though the broader advance is still capped by the longer-term downward resistance trend line projected from 96.9932

On the downside, immediate support is defined by the 20-day EMA at 95.00; a break below it would expose the pair to the May 7 low at 94.03. On the topside, a more meaningful resistance level is seen near the original descending trendline start point around 97, where a sustained break would open the way for a stronger bullish extension.

(The technical analysis of this story was written with the help of an AI tool. Know more.)