The Indian Rupee (INR) trades almost flat against the US Dollar (USD) at around 92.80 during India’s afternoon trading hours on Wednesday. The USD/INR pair wobbles as investors shift to the sidelines ahead of the Federal Reserve’s (Fed) monetary policy announcement at 23:30 IST (18:00 GMT).
During the press time, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades flat around 99.50 after a steep correction in the last two trading days.
The USD Index faced selling pressure in the last two trading days as its safe-haven demand diminished amid a recovery in riskier assets. Investors’ risk appetite improved after Iran allowed tankers from some nations, which are among the largest oil importers in the world, to ship energy products through the Strait of Hormuz.
Investors await cues regarding Fed’s monetary policy outlook
The major highlight of the day is expected to be the Fed’s monetary policy announcement in which it is anticipated to leave interest rates unchanged in the range of 3.50%-3.75%, according to the CME FedWatch tool. This would be the second straight meeting when the Fed will hold interest rates steady.
As the Fed will likely maintain the status quo, investors will pay more attention to the Fed’s dot plot, a tool that shows where officials see interest rates heading in the near-to-longer term, and comments from Chairman Jerome Powell in his press conference regarding the monetary policy outlook.
The CME FedWatch tool also shows that traders are confident about the Fed keeping interest rates at their current levels till the July policy meeting. For the September meeting, traders see an almost 53% chance of an interest rate cut.
The speculation of the Fed holding interest rates steady in the near term has intensified due to de-anchored inflation expectations across the world amid surging oil prices in the wake of the war in the Middle East, which involves the United States (US), Israel, and Iran.
Indian Rupee remains under pressure due to multiple headwinds
The outlook for the Indian currency remains grim, partly due to higher oil prices and the consistent foreign outflows from the Indian equity market.
Currencies from nations like India, which are heavily dependent on oil imports to fulfill their energy needs, face higher outflows in high oil price conditions. Although Iran has allowed Indian-flagged tankers to ship oil and Liquefied Petroleum Gas (LPG) through the Strait of Hormuz, this has eased concerns about India’s domestic energy supply, but higher oil prices could widen India’s fiscal deficit.
So far in March, Foreign Institutional Investors (FIIs) have remained net sellers on all trading days and have offloaded their stake worth Rs. 70,989.96 crore, according to NSE data. There has been a significant outflow of foreign funds from the Indian stock market in March as higher oil prices have forced market experts to trim their earnings projections for the fourth quarter of FY 2025-26.
Technical Analysis: USD/INR sees more upside as 20-day EMA keeps rising
USD/INR consolidates around 92.80 as of writing. The near-term bias is bullish as price holds above the rising 20-day Exponential Moving Average (EMA), which has trailed the advance from the mid-90.50s and continues to provide dynamic support. The sequence of higher closes remains intact despite a brief pause, while the 14-day Relative Strength Index (RSI) in the 60.00-80.00 zone signals strong upside momentum.
Initial support emerges at the 20-day EMA around 92.15, followed by a deeper cushion at 91.70 that aligns with the prior breakout area. A daily close below the latter would weaken the bullish structure and expose 91.30 next. On the upside, immediate resistance is at 92.95, the all-time high posted on March 13, with a break above this level opening the path toward the 93.50 region as the next upside objective.
(The technical analysis of this story was written with the help of an AI tool.)
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