USD/INR extends its advance as oil prices rise further

The Indian Rupee (INR) extends its decline against the US Dollar (USD) on Wednesday. The USD/INR pair rallies further to near 94.75, as oil prices have extended their advance, following comments from United States (US) officials on late Tuesday that President Donald Trump has instructed aides to prepare for an extended blockade of Iran, The Wall Street Journal (WSJ) reported.

At the press time, the WTI Oil price trades flat around $97.00 but gained sharply in the late Tuesday’s session to near $99.50, the highest level seen in almost three weeks.

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.

Trump prefers squeezing oil flows from Iran than bombing its territory again

The WSJ report showed the US President Trump has stated that the continuation of the blockade of Iranian sea ports is a preferred measure to push Tehran on the back foot in negotiating terms for a permanent ceasefire than bombing Iranian territory again.

The continuous US blockade on Iran means the prolonged closure of the Strait of Hormuz, a vital passage for almost 20% of global energy supply.

FIIs keep offloading their stake in Indian stock market

Overseas investors have emerged as net sellers for the seventh straight trading day on Tuesday, and have offloaded their stake worth Rs. 20,395.08 crore. Foreign Institutional Investors (FIIs) worry that “higher-for-longer” oil prices would be a major drag on India Inc.’s earnings projections by hitting their margins and will also diminish households’ spending power.

Investors shift focus to the Fed policy

On Wednesday, the major trigger for global markets will be the Federal Reserve’s (Fed) monetary policy announcement at 18:00 GMT, in which the central bank is expected to leave interest rates unchanged in the range of 3.50%-3.75%.

The Fed is expected to warn of upside inflation and downside economic risks amid escalated energy prices. This will be the last Fed policy meeting by Jerome Powell as Chairman. Investors will pay close attention to Fed Chair Powell’s speech to get fresh cues on the US interest rate outlook.

Technical Analysis: USD/INR approaches all-time high above 95.00

USD/INR trades higher at around 94.75 in the opening session on Wednesday. The pair holds a bullish near-term bias as spot remains above the 20-day exponential moving average (EMA) at roughly 93.66, keeping the recent advance supported.

The Relative Strength Index (RSI) around 63 suggests firm but not yet overbought upside momentum, reinforcing the constructive tone while leaving room for additional gains.

On the downside, immediate support is seen at the 20-day EMA near 93.66. As long as USD/INR defends this moving average, dips are likely to attract buying interest, and the broader uptrend is expected to stay intact. Looking up, the spot is expected to revisit the all-time high slightly above 95.00.

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