The Indian rupee (INR) continues its decline against the US dollar (USD) at the start of the holiday-shortened week. Indian markets will remain closed on Thursday due to Shri Ram Navami.
The USD/INR pair hits a recent lifetime high of 94.40 as the Indian rupee faces the heat of escalating conflicts in the Middle East in the wake of US President Donald Trump’s ultimatum to Iran to reopen the Strait of Hormuz within 48 hours via a post on Truth Social.
Iran announces retaliation against Trump’s 48-hour ultimatum
US President Donald Trump said on Saturday that they would “destroy” Iran’s power plants, starting with the largest, if they refuse to open the Strait of Hormuz within 48 hours.
Meanwhile, Iran responded with threats to indefinitely close the Strait of Hormuz and target all US- and Israeli-owned energy infrastructure, information technology (IT) and desalination facilities in the region, The Politico reports.
Escalating conflicts in the Middle East have weakened demand for riskier assets, forcing investors to move to sheltered assets. Asian stock markets have been bleeding due to the Iran conflict, with the Nifty 50 index falling almost 2.5% to its lowest level in over 11 months near 22,550.
Amid conflicts in the Middle East, the US dollar (USD) is trading slightly higher, with the US Dollar Index (DXY) rising 0.15% to almost 99.65. The US dollar remains broadly stable as investors expect the Federal Reserve (Fed) to adopt an extended interest rate pause while de-anchoring inflation expectations due to higher energy prices.
FIIs sell shares on the Indian stock exchange
Foreign investors continue to abandon their shares in the Indian stock market in the face of war in the Middle East. So far in March, foreign institutional investors (FIIs) have remained net sellers on all trading days and have shed their holdings worth Indian rupees. 86,780.89 crores.
FIIs are staying away from the Indian stock market amid fears that higher crude oil prices due to energy supply disruptions will result in lower earnings reports for Indian companies in the fourth quarter of fiscal 2025-26 than earlier estimated.
Meanwhile, oil supplies to the Asian region will be further reduced as Saudi Aramco, the world’s largest oil exporter, will cut oil supplies to Asian customers for a second month in April after the US-Israel war with Iran disrupted trade through the Strait of Hormuz.
Investors’ attention this week will focus on preliminary Indian and U.S. private sector purchasing managers’ index (PMI) data for March, which will be released on Tuesday.
Technical analysis: USD/INR hits all-time highs near 94.40
USD/INR jumped above 94.40 on Monday. The short-term bias is bullish as the price is rising sharply above the rising 20-day exponential moving average, which is currently well below the point price and confirming the established uptrend.
Recent candles show no significant pullback despite the edged rally, and momentum remains sturdy, with the 14-day Relative Strength Index (RSI) at 81.56 in overbought territory, signaling continued buying pressure rather than immediate exhaustion.
The sequence of higher highs and higher lows in recent sessions reinforces the bullish bias, while the lack of wick rejection at the top of the range indicates continued demand on the downside.
Initial resistance is currently seen near 94.50, where intraday supply may emerge, followed by a higher barrier towards 95.00, which is another reference point for growth if the bulls maintain control. On the other hand, immediate support converges around 94.00, where there has been some recent consolidation, before stronger support at 93.50. The 20-day EMA near 92.60 underpins a broader bullish structure and marks a deeper pullback area that would need to hold to sustain the current uptrend.
(The technical analysis for this story was written with the aid of an AI tool.)
