The Indian Rupee (INR) extended its recovery against the US Dollar (USD) in Friday's opening session, with the USD/INR pair falling to near 95.22 as the US Dollar weakened further. This decline in the US Dollar was attributed to the perception that the renewed conflict in the Middle East between the United States and Iran may not be prolonged, although concerns remain about ongoing aggression and energy supply disruptions [1]. The US Dollar Index (DXY) traded 0.3% lower, reaching a three-week low of 100.60, and marked its third consecutive day of losses on Friday [1].
Despite the ongoing tensions, a US official confirmed that technical talks with Iran are still ongoing, even as President Donald Trump declared the Memorandum of Understanding (MoU) with Tehran is over. President Trump also stated that Iran still wants a deal but expressed uncertainty about whether Iran will honor it. Late Thursday, Iranian state media reported that US forces struck several more locations in coastal Iran, keeping fears of further escalation alive [1].
Oil prices rebounded strongly on Friday, with the WTI Crude Oil contract expiring July 20 rising over 1.1% to near Rs. 6,930. This increase was driven by concerns that Middle East conflicts could disrupt global energy supplies. Higher oil prices typically weigh on currencies like the Indian Rupee, as India relies heavily on oil imports [1].
Foreign Institutional Investors (FIIs) turned net sellers on Thursday, offloading Rs. 532.86 crore worth of Indian equities after being net buyers from July 3-8. This shift comes as the first-quarter earnings season for FY 2026-27 begins, with Tata Consultancy Services (TCS) reporting results on Thursday. The outlook for overseas investor sentiment toward Indian equities remains mixed [1].
From a technical perspective, USD/INR trades lower at around 95.222 but maintains a mild bullish bias as it remains above the 20-day exponential moving average (EMA) at 95.11. The Relative Strength Index (RSI) has stayed within the 40.00-60.00 range for an extended period, showing signs of fatigue after a descending triangle breakout, which suggests a possible corrective move ahead. Immediate support is seen at the 20-day EMA near 95.11, with further support at the former descending trendline break around 94.69 [1].
CONCLUSION
The Indian Rupee's recent gains are supported by a weaker US Dollar and ongoing US-Iran technical talks, though elevated oil prices and geopolitical risks continue to pose challenges. Investor sentiment toward Indian equities is mixed as the earnings season begins, and technical indicators suggest a potential corrective move for USD/INR. Market participants should remain cautious amid persistent volatility in both currency and energy markets.