USD/INR gains as Trump's order to blockade Hormuz boosts oil prices

The Indian Rupee (INR) falls sharply in the opening trade against the US Dollar (USD) at the start of the week. The USD/INR pair rises to near 93.35 as rallying oil prices due to the announcement of a complete blockade of the Strait of Hormuz, a passage to almost 20% of global energy supply, by the United States (US) Navy, as instructed by President Donald Trump, have weighed heavily on the Indian Rupee.

Currencies from economies, such as India, that rely heavily on oil imports to meet their energy needs tend to underperform in a high oil price environment.

Trump announces blockade of Hormuz

US President Trump announced, through a post on Truth Social, he has ordered the Navy for a complete blockade of Iranian ports, as part of retaliation against Iran after the failure of peace talks with them.

“Effective immediately, the United States Navy, the Finest in the World, will begin the process of BLOCKADING any and all ships trying to enter, or leave, the Strait of Hormuz.” Trump wrote. He added, “I have also instructed our Navy to seek and interdict every vessel in International Waters that has paid a toll to Iran. No one who pays an illegal toll will have safe passage on the high seas.”

In response, US Central Command (CENTCOM) announced that the “Forces will start blockade of all maritime traffic entering and exiting Iranian ports on Monday, 10 AM ET” (14:00 GMT).

Negotiations regarding the permanent ceasefire in the Middle East collapsed on Iran’s refusal to drop its nuclear ambitions, as per Trump’s Truth Social post. At the start of the week, the WTI Oil price trades around $97.00.

Higher US Dollar also supports USD/INR

Renewed conflicts between the US and Iran have improved the safe-haven demand of the US Dollar. As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.3% higher to near 99.00.

In addition to the risk-off impulse, growing expectations that a higher oil price outlook would keep encouraging the Federal Reserve (Fed) to maintain a hawkish stance on interest rates have also strengthened the US Dollar.

US President Trump’s acknowledgment, in an interview with Fox Business, that gas prices could remain elevated through the November elections, a contradictory verdict from the one who had called several times that higher energy prices due to Middle East conflicts would be temporary, has prompted fears of de-anchoring inflation expectations.

“I hope so, I mean, I think so. It could be, it could be, or the same, or maybe a little bit higher,” Trump responded when asked whether oil and gas prices would fall ahead of the midterm elections, which are expected to produce dire results for Republicans, The Daily Beast reported.

India's CPI data awaited

On the domestic front, India's Consumer Price Index (CPI) data for March arrives higher at 3.4% Year-on-Year (YoY) against February's reading of 3.21%.

Meanwhile, Foreign Institutional Investors (FIIs) have turned out to be net buyers for the first time in almost six weeks in the Indian stock market. On Friday, FIIs bought shares worth Rs. 672.09 crore; however, the amount of investment was very small compared to the selling pressure seen in past few weeks.

Technical Analysis: USD/INR returns above 20-day EMA

USD/INR trades higher at around 93.40 on Monday. With price returning above its 20-day exponential moving average (EMA), which is at 92.96, the short-term tone of the pair turns bullish, though the lack of nearby mapped resistance levels argues for a more neutral overall bias.

The Relative Strength Index (RSI) at 56.41 sits in neutral territory, suggesting steady rather than aggressive bullish momentum as the spot consolidates after its recent advance.

On the downside, the 20-day EMA at 92.96 is the first meaningful dynamic support, and a daily close back below this area would expose the pair to its key support zone around 92.43. On the topside, the pair could extend its recovery towards 94.00, and might try to reclaim its all-time high of 95.14 after breaking above that level.

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