The Indian Rupee (INR) is trading much lower against the US Dollar (USD) on Monday. The USD/INR pair is hitting its highest level in over six weeks around 95.70 as renewed hostilities in the Middle East have boosted oil prices.

During the afternoon trading session in India, the MCX Crude Oil contract expiring on July 20 rose 2.4% to almost Rs. 6980.

Currencies from economies such as India that rely heavily on oil imports to meet their energy needs tend to underperform in a high oil price environment.

Over the past three days, the United States has struck more than 300 Iranian targets

Earlier in the day, US Central Command (CENTCOM) said forces had already attacked more than 300 Iranian targets in three nights, including 140 on Saturday alone, according to Reuters. Iranian media also confirmed several explosions near Sirik, west of Bandar Abbas, Qeshm and Jask. U.S. forces also said the attacks were aimed at crippling Iran’s ability to attack civilian ships in the Strait of Hormuz, a critical chokepoint for nearly 20% of the world’s energy supplies.

Following renewed aggression between the US and Iran, unthreatening assets have become more attractive.

In retaliation, Iran announced over the weekend that Hormuz would now be closed “until further notice.”

The CPI in India is rising strongly in June

On the domestic front, India’s Consumer Price Index (CPI) data was 4.38% year-on-year in June, higher than the estimate of 4.3% and the May reading of 3.93%. Signs of increasing inflationary pressure would raise expectations of interest rate hikes by the Reserve Bank of India (RBI).

This week, investors’ attention will also turn to US inflation data for June, which is scheduled for release on Tuesday. The U.S. core CPI – which excludes volatile food and energy items such as food and energy – is growing at a steady 2.9% y/y.

In addition to the US CPI data, investors will also pay attention to the comments of Federal Reserve (Fed) Chairman Kevin Warsh during his two-day appearance before the Treasury Committee, which will start on Tuesday.

FIIs invested a significant amount on Friday

Foreign institutional investors (FIIs) continued to be net buyers in the Indian stock market on Friday, investing a significant amount of Indian rupees. 2603.72 crores. These are the highest single-day purchases since June 19.

Foreign investor interest in the Indian stock market appears to be increasing over the past few weeks with the start of the earnings season for the first quarter of fiscal year 2026-27. So far in July, foreign investors remained net buyers in five of eight trading sessions.

Analysts at Goldman Sachs see ample scope for foreign flows to return to India, explaining that India’s outlook has improved in recent weeks on lower commodity prices, a stable currency, stable domestic growth and high earnings expectations. The investment banking firm expects reasonable value portfolios, such as large-cap companies, with banks likely to gain the most if overseas outflows reverse.

Technical Analysis: USD/INR Maintains Breakout From Descending Triangle

USD/INR is rising at around 95.70, maintaining a constructive bias in the compact term as it remains well above the 20-day exponential moving average (EMA) at 95.18. The pair also breaks out of the Descending Triangle formation.

The relative strength index (RSI) at 58.05 is leaning toward bullish momentum without yet signaling overbought conditions, suggesting buyers remain in control.

On the other hand, initial support can be seen at the 20-day EMA near 95.18, which is part of a short-term uptrend and may spark buying interest after dips. A deeper pullback would expose the former downtrend breakout area around 94.50, before the uptrend line area between roughly 94.12 and 94.06, where a loss of this band would undermine the current bullish tone and open the door to a more pronounced correction.

Looking up, the pair will try to reach the high again near 97.10 if it manages to break the July 9 high of 95.96.

(The technical analysis for this story was written with the support of an AI tool. Find out more.)