The Indian Rupee (INR) opens on a weak note against the US Dollar (USD) at the start of the week. The USD/INR pair jumps to near 96.46 as a fresh surge in oil prices and the consistent outflow of foreign funds from the Indian stock market are hurting the Indian currency.
In the opening trade, the MCX Crude Oil contract expiring on July 20 is 2.6% higher at around Rs. 8,150, the highest level seen in over a month.
Currencies from economies, such as India, which rely heavily on oil imports to meet their energy needs, tend to underperform in a high-oil-price environment.
Oil prices extend gains on continued US-Iran aggression
The continuous exchange of attacks between the United States (US) and Iran after the collapse of the ceasefire has pushed oil prices higher, disrupting the overall energy supply. Latest reports from Iran have shown that they are consistently attacking oil tankers attempting to transit the Strait of Hormuz, a vital passage to almost one-fifth of the global energy supply.
Iran’s Islamic Revolutionary Guard Corps (IRGC) said that two oil tankers were blown up after attempting to transit the southern route of the Strait of Hormuz. The Iranian military stated that the passage will not be safe for petrochemical products or ‘single drop of oil and gas’ transit as long as US actions in the region continue.
Meanwhile, US Central Command (CENTCOM) confirmed late Sunday that it had concluded a ninth straight night of strikes against Iran, clarifying that the latest aggression was in retaliation for the killing of at least three American service members. Earlier in the day, US President Donald Trump also confirmed that the latest US strikes on Iran were being carried out in honor of US service members killed in recent days.
FIIs extend selling spree for straight fifth trading day
Foreign Institutional Investors (FIIs) have turned out to be net sellers in the past few trading days. Surging oil prices due to renewed Middle East conflicts appear to have dented the sentiment of overseas investors toward the Indian stock market again.
Last week, FIIs remained net sellers on all trading days and offloaded their stake worth Rs. 9,119.76 crore.
Fed to leaves interest rates steady next week
The US Dollar gives back its opening gains and turns lower as investors remain confident that the Federal Reserve (Fed) will hold interest rates steady in the policy meeting later this month. At press time, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades slightly lower to near 100.70.
The CME FedWatch tool, the odds of the Fed leaving interest rates unchanged in the July meeting are 85.6%, up from 65.8% recorded last week. Soft US Consumer Price Index (CPI) data for June led traders to reconsider Fed interest rate hike expectations.
Technical Analysis: USD/INR aims to revisit all-time high near 97.10
USD/INR trades higher at around 96.44, holding a bullish near-term bias as spot trades above the 20-day exponential moving average (EMA) at 95.6596, keeping the recent advance technically supported.
The Relative Strength Index (RSI) at 64.13 stays in positive territory but below overbought, suggesting upward momentum remains constructive without signaling exhaustion yet.
On the downside, initial support is located at the 20-day EMA near 95.66, where a break would hint at a deeper corrective phase toward prior price congestion levels not visible in the current indicator set. Looking up, the pair aims to revisit the all-time high around 97.10
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Economic Indicator
Consumer Price Index (YoY)
Inflationary or deflationary tendencies are measured by periodically summing the prices of a basket of representative goods and services and presenting the data as The Consumer Price Index (CPI). CPI data is compiled on a monthly basis and released by the US Department of Labor Statistics. The YoY reading compares the prices of goods in the reference month to the same month a year earlier.The CPI is a key indicator to measure inflation and changes in purchasing trends. Generally speaking, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish.
