USD/INR refreshes three week high as Indian Rupee slumps amid Israel-Iran war

The Indian Rupee slides to near 86.30 against the US Dollar amid Middle East tensions.
Investors expect the Fed to leave interest rates steady on Wednesday.
The RBI opens the door for further monetary policy expansion.

The Indian Rupee (INR) refreshes three-week low 86.30 against the US Dollar (USD) during European trading hours on Tuesday. The USD/INR pair gains sharply as tensions between Israel and Iran have diminished the risk appetite of investors, a scenario that dampens demand for riskier currencies, such as the Indian Rupee.

The Israeli military said during late Asian hours on Tuesday that they have identified missiles launched from Iran toward Israel, according to the BBC News.

Along the G7 meeting, US President Donald Trump has asked Vice President JD Vance and the Middle East envoy to offer to meet with the Iranians this week, The New York Times reported.

This development came after a report from Reuters showed that Tehran asked its Middle East peers to urge US President Trump to use his influence on Israeli Prime Minister Benjamin Netanyahu to push for an immediate ceasefire.

A truce between Israel and Iran will provide dual benefits of a cheerful market mood and lower Oil prices to the Indian Rupee. The Indian currency was battered badly on Friday as the Oil price rallied after Israel launched a series of attacks on military bases and nuclear facilities in Iran, aiming to stop them from building nuclear warheads. Given that India is one of the largest oil-importing nations in the world, higher Oil prices weigh on the Indian Rupee.

Indian Rupee PRICE Today

The table below shows the percentage change of Indian Rupee (INR) against listed major currencies today. Indian Rupee was the weakest against the Canadian Dollar.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	INR
USD		0.04%	0.24%	0.04%	-0.04%	-0.07%	-0.13%	0.30%
EUR	-0.04%		0.17%	0.03%	-0.10%	-0.09%	-0.10%	0.40%
GBP	-0.24%	-0.17%		-0.20%	-0.27%	-0.26%	-0.31%	0.08%
JPY	-0.04%	-0.03%	0.20%		-0.09%	-0.13%	-0.18%	0.39%
CAD	0.04%	0.10%	0.27%	0.09%		-0.10%	-0.02%	0.47%
AUD	0.07%	0.09%	0.26%	0.13%	0.10%		-0.03%	0.42%
NZD	0.13%	0.10%	0.31%	0.18%	0.02%	0.03%		0.23%
INR	-0.30%	-0.40%	-0.08%	-0.39%	-0.47%	-0.42%	-0.23%

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).

Daily digest market movers: Indian Rupee weakens against US Dollar

The Indian Rupee gives back early gains and jumps to near 86.30 against the US Dollar. The US Dollar trades broadly sideways while investors await the Federal Reserve’s (Fed) monetary policy announcement on Wednesday. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, ticks up to near 98.20.
According to the CME FedWatch tool, the Fed is almost certain to leave interest rates steady in the range of 4.25%-4.50%.
Investors will closely monitor the comments from Fed Chair Jerome Powell at the press conference, following the interest rate decision, to get cues about when the central bank will start reducing its key borrowing rates. The major highlight of the Fed policy would be the Fed’s dot plot, which shows where officials see interest rates heading in the near and long term.
In today’s session, investors will focus on the US Retail Sales data for May, which will be published at 12:30 GMT. The Retail Sales data, a key measure of consumer spending, is expected to have declined by 0.7% after a 0.1% growth seen in April.
In the Asian region, Reserve Bank of India (RBI) Governor Sanjay Malhotra has expressed confidence that cooling inflationary pressures have opened space for further monetary policy expansion. “As regards any future easing, while it will not be right on my part to pre-empt the MPC, if the inflation outlook turns out to be below our projections, it will open up policy space,” Malhotra said in an interview with Business Standard on Monday.
Slightly dovish comments from RBI's Malhotra came after year-on-year Consumer Price Index (CPI) and Wholesale Price Index (WPI) data for May grew at a moderate pace. The CPI and WPI data rose by 2.82% and 0.39%, respectively. In the monetary policy announcement earlier this month, the RBI projected the headline inflation target for the current financial year at 3.7%.

Technical Analysis: USD/INR jumps to near 86.30

The USD/INR pair gains sharply to near 86.30 on Tuesday after a weak opening earlier in the day. The near-term trend of the pair remains firm as it holds the 20-day Exponential Moving Average (EMA), which trades around 85.77.

The 14-day Relative Strength Index (RSI) struggles to break above 60.00. A fresh bullish momentum would emerge if the RBI breaks above that level.

Looking down, the 20-day EMA is a key support level for the major. On the upside, the May 23 high of 86.44 will be a critical hurdle for the pair.

Economic Indicator

WPI Inflation

The WPI Inflation released by the Ministry of Commerce and Industry is a measure of price movements similar to the Consumer Price Indices (CPI). Generally, a high reading is seen as positive (or bullish) for the Rupee, while a low reading is seen as negative (or bearish).