The Indian rupee (INR) ended a three-day losing streak on Friday, strengthening to about 86.60 against the US dollar (USD) during European trading hours. The USD/INR exchange rate retreated after hitting a two-month high of 86.93 on Thursday, as the rupee gained ground while oil prices stalled following nearly three weeks of gains.
Oil Prices Struggle as US Signals No Immediate Middle East Intervention
Oil prices, a key factor for countries like India that heavily depend on oil imports, found it difficult to maintain upward momentum. This followed hints from the White House that the United States will not immediately intervene in the Middle East conflict. This development eased demand for safe-haven assets such as the US dollar, indirectly benefiting the rupee.
US Dollar Index Pulls Back From Weekly High
The US Dollar Index (DXY), which measures the dollar against six major currencies, dropped to around 98.60 on Friday from a weekly high of 99.15 set on Thursday. The pullback reflects reduced demand for the greenback amid easing geopolitical fears.
Caution Remains Amid Israel-Iran Conflict
Despite the rupee’s recent gains, uncertainty remains due to the ongoing Israel-Iran conflict. This situation is likely to keep oil prices elevated, posing a risk to the rupee’s further appreciation.
Foreign Institutional Investors Continue Selling Pressure
Foreign institutional investors (FIIs) remained net sellers of Indian equities, despite injecting Rs 33,083.2 crore into the market this month, according to exchange data. The continued outflow of FII funds poses challenges for emerging markets like India.
Technical Outlook: INR Shows Signs of Bullish Momentum
The Indian rupee strengthened to around 86.60 against the US dollar on Friday. The USD/INR pair failed to break the key resistance level of 87.00 on Thursday, facing selling pressure. However, the short-term trend looks bullish as the 20-day exponential moving average (EMA) is rising near 86.03.
The 14-day Relative Strength Index (RSI) has crossed above 60.00, signaling the start of new bullish momentum.
On the downside, the 20-day EMA provides key support for the pair. On the upside, the April 11 high of 87.14 stands as an important resistance level.
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