USD/INR strengthens as US-Iran war triggers oil price spike, risk-off mood
- The Indian Rupee falls sharply to near 91.80 against the US Dollar amid the US-Iran war.
- Middle East tensions have spiked the oil prices and triggered risk-off market sentiment.
- India’s Q4 GDP registers a strong 7.8% growth against estimates of 7.2%.
The Indian Rupee (INR) starts the week on a negative note against the US Dollar (USD), with the USD/INR pair rising 0.25% to near 91.80 amid sour market sentiment and surging oil prices due to a brutal war between the United States (US) and Iran.
S&P 500 futures trade sharply lower, and Asian stock markets plunge in the Asian trade on Monday, demonstrating a risk-off market sentiment.
The oil prices soar following reports of two attacks on tankers in or near the Strait of Hormuz amid the US-Iran war. WTI futures on the NYMEX are up over 4% to near $70, the highest level seen in over seven months. Currencies from countries like India that rely heavily on oil imports to meet their energy needs remain highly sensitive to changes in oil prices.
Over the weekend, Israel and the US military launched a series of strikes against Iran in which their 48 leaders, including top leader Ayatollah Ali Khamenei, were killed, according to Fox News.
In response, Iran’s Islamic Revolutionary Guard Corps (IRGC) retaliated with missile and drone attacks against Israel and US military bases across the Middle East and several West Asian countries.
Meanwhile, Tehran has announced Ayatollah Alireza Arafi as its interim leader after the killing of Supreme Leader Ayatollah Ali Khamenei.
On the domestic front, India’s Q4 Gross Domestic Product (GDP) data has surprised markets after registering a 7.8% Year-on-Year (YoY) growth, faster than estimates of 7.2%, but slower than 8.2% in the third quarter of 2025.
After strong Q4 numbers, India’s Chief Economic Adviser V Anantha Nageswaran has revised GDP growth for the entire Financial Year (FY) 2026-27 to 7%-7.4% from the 6.8%-7.2% projected last month.
During the Asian trade, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.23% higher to near 97.85 amid a risk-off mood. This week, the major trigger for the US Dollar will be the US Nonfarm Payrolls (NFP) data for February, which will be released on Friday.
Technical Analysis: USD/INR aims to extend advance towards 92.50
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USD/INR jumps to near 91.75 in the opening trade on Monday, the highest level seen in a month. The pair demonstrates a mild bullish bias as price holds above the 20-day Exponential Moving Average, which is starting to edge higher again after a period of consolidation.
The 14-day Relative Strength Index (RSI) jumps vertically to 65.00 after consolidating in the 40.00-60.00 range for a month, hinting at the onset of a fresh bullish momentum.
As long as the pair stays above the 20-day EMA, the odds remain high that it could revisit the all-time high of 92.50. On the downside, the 20-day EMA around 91.05 forms first support, with a deeper pullback exposing the late-February trough at 90.60. A daily close below 90.60 would negate the current bullish bias and shift focus toward the 90.25 zone.
(The technical analysis of this story was written with the help of an AI tool.)
Economic Indicator
Gross Domestic Product Quarterly (YoY)
The Gross Domestic Product released by the Ministry of Statistics is a measure of the total value of all goods and services produced by India. The GDP is considered as a broad measure of Indian economic activity and health. Generally speaking, a high reading is seen as positive (or bullish) for the Rupee, while a falling trend is seen as negative (or bearish).
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Sagar Dua
FXStreet
Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.
