Indian Rupee advances as fading risk aversion weighs on US Dollar
The Indian Rupee (INR) gains ground after registering modest losses in the previous day against the US Dollar (USD) on Thursday. The USD/INR pair depreciates as the US Dollar (USD) declines on easing safe-haven demand following the BBC report late Wednesday, suggesting that the White House confirmed that US President Donald Trump and Iranian President Masoud Pezeshkian signed a preliminary memorandum of understanding designed to end the US-Israel war on Iran.
Fed rate hike odds in 2026
However, the USD/INR pair may regain its ground as the US Dollar could rebound on rising odds of rate hikes by the Federal Reserve (Fed) later this year. The Fed’s June Summary of Economic Projections showed half of FOMC members expect at least one rate hike this year. Despite economic disruptions linked to the conflict in Iran, resilient labor market data and persistent underlying inflation measures continue to drive tightening pressures.
The Federal Open Market Committee (FOMC) voted unanimously to maintain its benchmark federal funds rate in the range of 3.5% to 3.75%. In his first meeting since taking the helm of the US central bank, the newly appointed Federal Reserve Chairman, Kevin Warsh, vowed to aggressively restore price stability.
Indian equities fall following the Federal Reserve's decision to hold interest rates steady, amid signals that the central bank could still hike borrowing costs later this year. The prospect of higher-for-longer US rates typically sours the appeal of emerging markets like India, keeping investor risk appetite firmly in check.
WTI declines on easing supply risks
The Indian Rupee is expected to see relief from depreciation pressures as global crude oil prices extend their decline. This drop follows a landmark interim agreement between the United States and Iran, which halted their active military conflict and fully reopened the vital Strait of Hormuz, successfully calming global energy supply anxieties.
UK-India trade deal to start in July
The landmark free trade agreement between Britain and India will officially take effect next month on July 15. The rollout was locked in after India confirmed its concerns had been resolved regarding the UK’s upcoming steel tariff regime, which had previously threatened to delay the deal. Signed last year, the long-awaited economic pact unites the world’s fifth- and sixth-largest economies.
RBI rejects offshore settlement for sovereign bonds
The Reserve Bank of India (RBI) remains opposed to enabling the direct settlement of local government bonds through offshore platforms like Euroclear, according to Reuters sources. Despite recent tax incentives designed to lure foreign capital, the central bank is holding its ground: it wants overseas investors to trade directly on its domestic NDS-OM electronic platform rather than using international clearing houses.
Technical Analysis: USD/INR trades near 94.50 below moving averages
USD/INR depreciates after registering modest gains the previous day, trading around 94.60 at the time of writing. The technical analysis of the daily chart suggests that the spot price remains within the descending triangle, indicating a consolidation phase.
The 14-day Relative Strength Index (RSI) around 43 suggests weak momentum, reinforcing the risk of further downside as long as price remains suppressed beneath these moving averages.
The immediate support lies at the lower boundary of the descending triangle around 94.30, while the initial resistance lies at the 50-day EMA of 94.74, followed by the nine-day EMA at 94.89.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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