Higher oil prices maintain pressure on Indian Rupee as it hits two-week low

• Elevated oil prices drive further losses in the Indian Rupee against the US Dollar.
• Following elections, the US and Iran are preparing to conduct a joint military operation against Iran.
• Interest rates remained at 3.75%-4.00% following the Fed’s decision on Wednesday.

Trading slightly higher at around 95.30 in Thursday’s opening session, USD/INR has pushed the Indian Rupee (INR) back to a two-week low against the US Dollar (USD). Persistently high oil prices continue to weigh on the South Asian currency.

The MCX Crude Oil contract expiring on 19 November stands near Rs. 9,650 at the time of writing, a decline of 1.5%. Despite that fall, prices remain close to their recent highs of Rs. 9,828.

When oil prices are high, currencies of economies heavily dependent on imported oil for their energy requirements, including India, typically underperform.

Energy supply fears keep oil prices elevated

Mounting concern over a further escalation in energy supply risks has kept oil prices high. Reports suggest Israel and the United States (US) are preparing to launch fresh attacks on Iran following their respective elections.

According to strategists at Deutsche Bank, oil prices remain broadly higher following a Wall Street Journal (WSJ) report that the administration of United States (US) President Donald Trump had warned Gulf states to prepare for a new operation against Iran after the midterms. Danske Bank’s research team also points to further geopolitical support for prices: in his post-election speech, Israeli Prime Minister (PM) Benjamin Netanyahu raised the possibility of “renewed joint action with President Trump against Iran”.

Energy supply worries are also being fuelled by continuing tensions between Saudi Arabia and the Iran-aligned Houthis. A military spokesperson for Yemen’s Iran-aligned Houthis said on Tuesday that the group had fired a ballistic missile towards the Ras Tanura oil refinery in eastern Saudi Arabia, the kingdom’s largest refinery, according to Reuters.

US Dollar edges higher following Fed policy decision

A modest rebound in the US Dollar following the Federal Reserve’s (Fed) monetary policy announcement is providing additional support for USD/INR. At the time of writing, the US Dollar Index (DXY) is marginally higher near 102.20. The index measures the Greenback against six major currencies.

Following Wednesday’s Fed monetary policy decision, the USD Index slipped back towards 102.00, bringing its three-day run of gains to an end.

As expected, the Fed maintained interest rates within the 3.75%-4.00% range at its policy meeting and reaffirmed its commitment to achieving price stability. According to Fed Chairman Kevin Warsh, there would be only six monetary policy decisions starting in 2028.

USD/INR retains a mildly bearish technical bias

At 95.2875 on the daily chart, USD/INR remains below its 20-day Exponential Moving Average (EMA) of 95.3303, leaving the near-term outlook mildly bearish. Failure to regain this short-term EMA indicates that nearby dynamic resistance continues to restrain rallies. Meanwhile, a Relative Strength Index (RSI) reading of around 47 signals neutral-to-soft momentum rather than oversold conditions, leaving limited room for a sharp rebound.

Any recovery first faces immediate resistance at the 20-day EMA of 95.3303. A sustained move above that threshold would alleviate downward pressure and allow a broader period of consolidation. As the current dataset provides no clear structural support levels, traders may instead watch the recent closing-low area just below 95.10 as an indicative zone where demand could return should selling resume.

(The technical analysis of this story was written with the help of an AI tool. Know more.)