The Indian Rupee weakened sharply against the US dollar after Trump canceled the Iran MoU, triggering a spike in oil prices and renewed Fed tightening bets.
Market Overview: USD Strengthens on US-Iran Tensions
The US dollar rallied this week amid renewed geopolitical risks following escalating US-Iran hostilities. The conflict intensified after the US conducted strikes on Iranian targets in retaliation for attacks on vessels in the Strait of Hormuz. Iran responded with bombings on US bases in Bahrain and Kuwait, raising fears of broader regional instability. Markets reacted swiftly, with oil prices surging and inflation concerns resurfacing.
Rupee Under Pressure Amid Oil Price Volatility
The Indian Rupee faced renewed selling pressure as oil prices spiked following President Trump's declaration that the US-Iran Memorandum of Understanding was terminated. The currency's decline accelerated, reflecting its sensitivity to energy costs given India's heavy import dependence. Technical indicators suggest the USD/INR pair is testing key resistance levels, with traders eyeing potential breakouts.
Technical Analysis: USD/INR Daily Chart
On the daily timeframe, USD/INR approached the 96.10 resistance zone. A sustained move above this level could target the record high of 97.33, while a pullback may find support near 94.00. Traders are monitoring momentum for signs of continuation or reversal.
4-Hour and 1-Hour Outlook
The 4-hour chart shows a retest of the 95.10 level, now acting as support, with an upward trendline guiding bullish momentum. A break below the trendline could signal short-term weakness. On the 1-hour chart, sellers favor a defined risk setup around 96.10 resistance, while buyers await a confirmed breakout or retracement.
Implications for Traders
The USD/INR pair remains in a bearish structural trend, driven by Fed tightening expectations and oil price volatility. Upcoming catalysts include the FOMC minutes and US jobless claims data, which may influence rate hike probabilities. Traders should monitor key technical levels and geopolitical developments for directional cues.
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