The Indian Rupee (INR) rebounded on Friday, ending a three-day losing streak as easing crude oil prices provided relief to the currency. The optimism stems from reports suggesting that the United States and Iran are nearing an agreement on Tehran’s nuclear program, raising expectations of increased Iranian oil supply. As the world’s third-largest oil consumer, India benefits significantly from lower crude prices, which help ease inflationary pressures and support the rupee.
However, the INR faces headwinds from renewed U.S. dollar demand by importers and ongoing foreign fund outflows. Market participants are also eyeing key U.S. economic data due later in the day, including Building Permits, Housing Starts, and the preliminary University of Michigan Consumer Sentiment Index. Federal Reserve official Thomas Barkin is scheduled to speak, potentially influencing market sentiment further.
Crude Price Decline Supports Rupee Amid Dollar Demand
The dollar-rupee overnight swap rate dipped, indicating strong demand for cash dollars and signaling continued foreign capital outflows, according to market insiders. Meanwhile, India is actively pursuing a trade deal with the U.S. within the 90-day tariff pause announced by President Trump on April 9, aimed at reducing trade tensions with key partners.
Recent U.S. inflation data showed Producer Price Index (PPI) growth slowed to 2.4% year-over-year in April, down from 2.7% in March and below market expectations of 2.5%. Additionally, Initial Jobless Claims remained steady at 229,000 for the week ending May 10, in line with forecasts. Continuing claims rose modestly by 9,000 to 1.881 million for the week ending May 3.
Technical Outlook: USD/INR Shows Bearish Signs Below 100-Day EMA
Technically, the Indian Rupee strengthened against the dollar, with the USD/INR pair holding a bearish bias as prices remain below the key 100-day Exponential Moving Average (EMA) on the daily chart. The 14-day Relative Strength Index (RSI) sits near the midpoint, indicating a potential for further consolidation or short-term recovery.
Key support for USD/INR is at 84.95, the low recorded on April 28. A decisive break below this level could push the pair down to 84.61, the May 12 low, followed by 84.12, the low on May 5. On the upside, immediate resistance stands at 85.60—the 100-day EMA—with a clear break above this level potentially fueling a rally toward the 86.00-86.05 zone, which aligns with a psychological round number and the upper boundary of the prevailing trend channel.
As global trade developments and U.S. economic indicators unfold, the Indian Rupee remains sensitive to both external factors and technical cues, with cautious optimism prevailing among traders.
