USD/INR remains firm as higher oil prices, Fed policy awaited

The Indian Rupee underperforms against the US Dollar amid elevated oil prices.
US-Iran diplomacy stalemate keeps oil prices higher.
FIIs continue to exert selling pressure in the Indian stock market.

Sagar Dua FXStreet

The Indian Rupee (INR) holds onto weekly losses against the US Dollar (USD) at open on Monday. The USD/INR pair trades firmly near 94.30 as elevated oil prices, strong demand for US Dollars by importers, and escalating sell-off by overseas investors in the Indian stock market are acting as major headwinds for the Indian Rupee.

Iran delivers new proposal on Hormuz reopening

The WTI Oil price is marginally positive around $93.60 in the Asian trade on Monday as the United States (US)-Iran diplomacy remains at a stalemate, following Washington’s refusal to visit Islamabad for another round of peace talks.

Following the cancellation of US envoys Steve Witkoff and Jared Kushner's visit to Islamabad, President Donald Trump clarified that Washington is available on the phone and doesn’t want to waste time taking an 18-hour flight for unproductive talks, Axios reported.

US President Trump added that the counteroffer by Iran's foreign minister Seyed Abbas Araghchi, received through Pakistan, was not good enough, and Washington has all the cards. Trump confirmed that the diplomatic stalemate doesn’t mean the war will resume.

Earlier in the day, a report by Axios showed that Iran has given a new proposal to the US on reopening of the Strait ⁠of Hormuz, a vital passage to almost 20% of global energy supply, and the ending of the war, with nuclear negotiations postponed for a ‌later ⁠stage.

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.

Meanwhile, stubbornly high oil prices have increased demand for US Dollars by Indian importers, which is also weighing heavily on the Indian Rupee.

FIIs remain dumping their stake in Indian stock market

There seems to be a significant increase in the selling pressure by Foreign Institutional Investors (FIIs) in the Indian stock market amid stalled US-Iran peace talks. On Friday, FIIs offloaded their stake worth Rs. 8,827.87 crore, which was higher than the combined selling amount of Rs. 8,311.99 crore being recorded in the first four trading days of the previous week.

Foreign investors remain cautious over the India Inc. earnings outlook, amid fears that higher oil prices would hit the operating margins of various companies badly.

Investors await the Fed's policy

This week, investors will pay close attention to the Federal Reserve's (Fed) monetary policy announcement on Wednesday, in which it is expected to leave interest rates unchanged in the range of 3.50%-3.75% for the third time in a row. The Fed is expected to warn of upside inflation risks and downside economic risks amidst elevated energy prices.

Technical Analysis: USD/INR trades firmly above 20-day EMA

USD/INR trades firmly at around 94.30 as of writing, keeping a bullish near-term bias as spot holds above the 20-day exponential moving average (EMA) at 93.42. The pair is pressing near recent highs, and the Relative Strength Index (RSI) around 59 suggests positive but not extreme momentum, hinting that buyers still have the upper hand while conditions remain short of overbought territory.

On the downside, initial support is located at the 20-day EMA near 93.42, which acts as the primary dynamic floor and would need to give way to signal a deeper correction. As long as USD/INR holds above this level, pullbacks are likely to be viewed as corrective within the broader uptrend, with bulls looking to defend that moving average on dips and extend the advance towards the all-time high around 95.20.

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

Economic Indicator

Fed Interest Rate Decision

The Federal Reserve (Fed) deliberates on monetary policy and makes a decision on interest rates at eight pre-scheduled meetings per year. It has two mandates: to keep inflation at 2%, and to maintain full employment. Its main tool for achieving this is by setting interest rates – both at which it lends to banks and banks lend to each other. If it decides to hike rates, the US Dollar (USD) tends to strengthen as it attracts more foreign capital inflows. If it cuts rates, it tends to weaken the USD as capital drains out to countries offering higher returns. If rates are left unchanged, attention turns to the tone of the Federal Open Market Committee (FOMC) statement, and whether it is hawkish (expectant of higher future interest rates), or dovish (expectant of lower future rates).

AUD/USD weakens to multi-month lows; challenges 0.6800

AUD/USD has come under heightened downside pressure, briefly slipping back below the 0.6800 yardstick on Thursday. Indeed, the pair has revisited levels last seen in late January in response to the continuation of the bullish momentum favouring the Greenback, which remained propped up by rising bets over extra Fed tightening.

USD/JPY eases from near 160.00 amid looming intervention risks, BoJ hike bets

USD/JPY retreats slightly from an over two-month high as the recent surge back to the 160.00 psychological mark prompted verbal warnings from Japanese authorities and sparked fears of direct FX intervention. Moreover, data showed that Japan’s wholesale inflation picked up again in October, strengthening the case for a BoJ hike in December and lifting the Japanese Yen. However, a bullish US Dollar, bolstered by odds of a jumbo Fed rate hike in December, could cap the pair's downside.

Gold shifts the focus to $3,800 amid stronger US Dollar

Gold comes under heightened downside pressure, retreating for the third consecutive day and approaching the $3,800 region per troy ounce on Thursday. Increasing speculation of a 50-bps rate hike by the Fed in December continues to weigh on the precious metal amid further gains in US Treasury yields.

Dogecoin Price Forecast: DOGE tests three-year low as selling pressure deepens

Dogecoin (DOGE) trades lower around $0.0650 on Thursday, as bears tighten their grip. The path of least resistance remains downward not only for the largest meme coin by market capitalization but also for crypto majors Bitcoin (BTC), Ethereum (ETH) and Ripple (XRP). DOGE is down about 2.6% on the day, aligning with levels last seen in October 2023.

Nvidia shares crash as Jensen Huang resigns as CEO

Nvidia (NVDA) shares collapsed in Thursday's premarket after longtime CEO and co-founder Jensen Huang resigned as CEO in the face of board scrutiny over several affairs. Nvidia shares have shed 10% at the time of writing as the leading AI chipmaker chose chief financial officer (CFO) Colette Kress as interim CEO.

What the US CPI headline doesn’t tell you about inflation

Brent crude has fallen about a third since mid-October on hopes the Iran war is ending, but diesel, freight and fertiliser costs haven't followed. Those costs reach US consumer prices in stages through 2027 and could keep inflation high after gasoline gets cheaper.