USD/INR's retraces as Middle East ceasefire hopes underpin risk-on mood
- The Indian Rupee trades higher against the US Dollar amid optimism of a ceasefire in the Middle East.
- Oil prices come under pressure after reports that the US pursues a month-long ceasefire with Iran.
- The Fed is unlikely to make any dovish monetary policy adjustment this year.
The Indian Rupee (INR) holds slight early gains against the US Dollar (USD) on Wednesday, with the USD/INR pair retracing to near 94.30 from the lifetime high of 94.75 posted the previous day. The Indian currency gains temporary ground as oil prices come under pressure, following reports that the United States (US) is seeking a month-long ceasefire with Iran and has delivered a 15-point deal proposal, reflecting meaningful signs of de-escalation in an over three-week-long war. Also, a Reuters report showed that the Indian central bank likely intervened to support the Indian Rupee.
The table below shows the percentage change of Indian Rupee (INR) against listed major currencies today. Indian Rupee was the strongest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | INR | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.15% | 0.25% | 0.21% | 0.10% | 0.40% | -0.08% | 0.24% | |
| EUR | -0.15% | 0.09% | 0.06% | -0.05% | 0.25% | -0.25% | 0.08% | |
| GBP | -0.25% | -0.09% | -0.04% | -0.15% | 0.15% | -0.34% | -0.01% | |
| JPY | -0.21% | -0.06% | 0.04% | -0.10% | 0.20% | -0.31% | 0.03% | |
| CAD | -0.10% | 0.05% | 0.15% | 0.10% | 0.31% | -0.20% | 0.14% | |
| AUD | -0.40% | -0.25% | -0.15% | -0.20% | -0.31% | -0.50% | -0.17% | |
| INR | 0.08% | 0.25% | 0.34% | 0.31% | 0.20% | 0.50% | 0.32% | |
| CHF | -0.24% | -0.08% | 0.01% | -0.03% | -0.14% | 0.17% | -0.32% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Indian Rupee from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent INR (base)/USD (quote).
Israel's Channel 12, quoting three sources, said the US was seeking a month-long ceasefire to discuss the 15-point plan, Reuters reports.
Currencies from countries that rely heavily on oil imports to meet their energy needs get benefited by easing oil prices. WTI oil price trades marginally higher in the Asian trade around $88.25, but has come down significantly from its recent highs of $100.00.
FIIs selling and Gulf's energy infrastructure to cap INR's upside
However, fears that the damage to various energy facilities in the Gulf region due to the Middle East war could push oil prices higher again, and the consistent outflow of foreign funds from the Indian stock market could continue to weigh on the Indian Rupee.
“The war has resulted in lasting damage to infrastructure, so even if it's over soon, energy prices may well remain higher,” analysts at Capital Economics said.
So far in March, Foreign Institutional Investors (FIIs) have remained net sellers on all trading days and offloaded their stake worth Rs. 1,05,204.68 crore.
Iran dismisses its involvement in ceasefire talks with US
Even as the market sentiment has improved amid optimism that conflicts in the Middle East won’t escalate further, the US Dollar continues to attract bids near its immediate lows as Iran keeps denying its involvement in any direct talks with the US.
In the opening trade, India’s Nifty 50 is up almost 1.7% above 23,300, and S&P 500 futures rise 0.7% to near 6,603 during the Asian session, reflecting risk-on sentiment. Meanwhile, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.13% higher to near 99.32.
In addition to Iran’s denial of de-escalation talks with the US, a firm speculation that the Federal Reserve (Fed) will remain on an extended pause or tighten monetary conditions this year is also offering support to the US Dollar.
According to the CME FedWatch tool, the collective odds of the Fed holding interest rates steady in the current range of 3.50%-3.75% or raising them in the December meeting are 91.4%.
Technical Analysis: USD/INR aims to revisit lifetime highs of 94.75
USD/INR trades lower at around 94.30 at the press time. However, the near-term bias is bullish as the price holds in a firm upswing above the rising 20-day Exponential Moving Average (EMA), which is around 92.85. The recent pullback from the 94.50 region has not damaged the broader advance, as the pair continues to respect the short-term trend support and trades well above the prior consolidation band around 92.50–93.00.
The 14-day Relative Strength Index (RSI) at 72.19 remains in overbought territory, confirming strong upward momentum, although it also warns that fresh gains would stretch conditions further if the pair extends higher without consolidation.
Initial resistance lies at the recent 94.75 peak, and a daily close above this level would open the path toward the 95.00 psychological barrier as the next upside objective. On the downside, immediate support is located at 93.65, with a break exposing the 93.00 area, where prior congestion aligns with the rising 20-day EMA to form a key demand zone. A deeper correction below 93.00 would weaken the short-term bullish structure and bring 92.40 into view, but while the price holds above this band, dips are set to remain contained within an overall upward trend.
(The technical analysis of this story was written with the help of an AI tool.)