The Indian Rupee (INR) came under pressure on Wednesday, weighed down by a continued rise in global crude oil prices. As the world’s third-largest oil consumer, India faces a worsening trade balance when oil prices surge, often translating into depreciation pressure on the local currency.
Despite this, the Rupee may find some relief from recent weakness in the U.S. Dollar. A batch of underwhelming U.S. economic data has tempered bullish sentiment toward the Greenback. Analysts at BofA Securities noted that once trade-related uncertainties ease, Indian markets are likely to become one of the top three destinations in Asia for foreign capital inflows—an outlook that could support the Rupee over the medium term.
Key Events in Focus: RBI Decision, U.S. Data
Market participants are now turning their attention to the U.S. ISM Services PMI, due later on Wednesday, and the Reserve Bank of India’s (RBI) upcoming policy decision on Friday. The RBI is widely expected to announce a third consecutive 25 basis point rate cut, reflecting a proactive stance amid evolving global economic conditions.
Meanwhile, the spotlight remains on Friday’s U.S. employment report for May, which could set the tone for broader dollar direction and risk appetite in the coming sessions.
India’s Growth Outlook and Foreign Interest
The Organisation for Economic Cooperation and Development (OECD) projects India’s economy to expand by 6.3% in 2025–26 and 6.4% in 2026–27. David Hauner, Head of Global Emerging Markets Fixed Income Strategy at BofA Securities, stated that India stands out within Asia due to its unique growth drivers, making it an attractive investment destination relative to other regional markets.
Tariff Risks and Fed Commentary Impact Sentiment
Investor caution lingers amid ongoing global trade tensions. Fed Governor Lisa D. Cook highlighted on Tuesday that trade policy under the Trump administration remains a key risk to economic stability. Chicago Fed President Austan Goolsbee added that it remains to be seen whether current tariffs will have a minor or major economic impact.
USD/INR Technical Outlook: Bullish Momentum Builds
The USD/INR pair is trading around its 100-day Exponential Moving Average (EMA) on the daily chart. A decisive move above this key technical level could open the door to further upside. The 14-day Relative Strength Index (RSI), currently around 55, suggests that bullish momentum is gaining traction.
Immediate resistance lies at 86.10, the high from May 22. A sustained break above this level could pave the way toward 86.71 (April 9 high) and eventually 87.30 (March 12 high).
On the downside, initial support rests at 85.30 (June 3 low). Further declines could bring the pair toward 85.04 (May 27 low), with the next critical support zone near 84.61, the low of May 12.
In summary, while rising oil prices are weighing on the Rupee in the short term, expectations of strong foreign inflows, RBI action, and softening U.S. data could provide a counterbalance in the days ahead.
