US Dollar vs Indian Rupee holds steady amid peace deal between US and Iran lowering oil prices

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US Dollar vs Rupee slides 0.51% today

Highlights

India eliminates withholding tax for foreign investors on government securities, boosting rupee asset appeal and likely increasing capital flows.
Banks gain new ability to swap US dollar deposits with the Reserve Bank of India, enhancing currency risk management amid falling oil prices supporting India’s external position.
USD/INR trades below key short- and medium-term averages, with technical indicators signaling strong bearish momentum and a high probability of a move toward the 93.9906 support level in the coming days.

Foreign inflows and oil-driven balance boost as policy changes announced

India's Finance Minister Nirmala Sitharaman announced exemptions on withholding tax for interest and capital gains earned by foreign investors in government securities, a move that directly increases the appeal of rupee assets to overseas participants and is expected to enhance capital inflows. Additionally, new measures will permit banks to swap US dollar deposits with the Reserve Bank of India to better manage currency risk, offering financial institutions greater flexibility to hedge against exchange rate fluctuations. The backdrop also includes the recent decline in crude oil prices below $84 per barrel following a peace deal between the US and Iran, which improves India's external balance through lower import costs, though price action has remained under broader selling pressure.

Persistent selling pressure as mid-term resistance outweighs long-term support

On the technical side, USD/INR is trading below the MA-20 at ₹94.8348 and MA-50 at ₹95.1685, indicating prevailing short- and medium-term resistance levels, while remaining above the MA-200 at ₹92.1348, which marks significant long-term support. The Ichimoku Kijun sits at ₹94.8134 and serves as immediate resistance. Key support for the pair can be found at ₹93.9906, with additional resistance at ₹94.9352. Both MACD and ADX signal strong selling momentum on the H1 timeframe, while RSI, Stoch RSI, and CCI all align with a persistent sell bias and show no indication of oversold conditions. BBP further underscores seller dominance in intraday moves, while the Awesome Oscillator is neutral.

Sideways consolidation likely as resistance and support levels define range

Looking ahead over the next 2 trading days, USD/INR is expected to remain within the projected volatility band of ₹93.9906 to ₹94.9352. The scenario with the highest likelihood is sideways price action as the pair consolidates within this range. A bullish breakout would require a sustained move above the ₹94.8134 resistance. If USD/INR decisively breaks below the ₹93.9906 support level, it could open the way to further downside.

Anton Kharitonov, expert at Traders Union, sees fundamental improvements in India’s policy stance, but notes persistent downside pressure on USD/INR. Despite incentives for foreign investors and supportive macro news, technical signals point to ongoing seller dominance. He remains cautious as intraday momentum indicators reinforce a bearish outlook. "Until the ₹94.8134 resistance is reclaimed, there is no technical argument for a reversal."

Earlier, analysts noted that recent regulatory reforms and foreign capital inflows were underpinning medium-term strength for the rupee despite mixed momentum signals. The current technical setup, coupled with new tax exemptions and evolving macro factors, indicates that downside risks have intensified, making a close below ₹93.9906 the key signal for a shift toward further weakness in USD/INR.

Source of Data: USD Price Analysis by TU

The analysis is based on a proprietary model combining technical, on-chain, and expert data. Not investment advice. See methodology

The information is based on forecasts and does not constitute investment advice or a guarantee of future results. Market conditions may change. See our Disclaimer and Editorial Integrity for details.