USD/INR continues its winning streak for the third successive session on Thursday. The Indian Rupee (INR) remained under pressure as volatile oil prices and weak domestic equities weighed on sentiment, though intermittent US Dollar (USD) sales by state-run banks helped limit losses, traders told Reuters.
Oil prices rise due to shipping disruptions through the strategic Strait of Hormuz. Crude extended gains as the risk of a prolonged Iran conflict overshadowed a coordinated release of oil reserves by major economies. Markets also viewed the emergency supply measures as insufficient even after the International Energy Agency (IEA) agreed to its largest-ever release of 400 million barrels.
Meanwhile, the USD/INR pair strengthened as the US Dollar remained firm. Surging energy prices have heightened forward-looking inflation risks, reducing expectations that the Federal Reserve (Fed) will cut interest rates soon.
Meanwhile, recent inflation data suggested price pressures remain relatively contained, reinforcing expectations that the Fed may keep policy steady in the near term. Analysts also noted that the latest inflation figures do not yet fully capture the recent surge in oil prices driven by geopolitical tensions.
The February US Consumer Price Index (CPI) released on Wednesday showed inflation rising 0.3% month-over-month (MoM) and 2.4% year-over-year (YoY), largely in line with market expectations. Core CPI, which excludes food and energy, increased 0.2% MoM and 2.5% YoY. Traders will now focus on the upcoming US Personal Consumption Expenditures (PCE) data due Friday for further policy clues.
Technical Analysis: USD/INR eyes record high of 92.81 near ascending channel upper boundary
USD/INR trades around 92.70 on Thursday. The technical analysis of the daily chart indicates a persistent bullish bias as the pair rises within the ascending channel pattern.
The near-term bias is bullish as the USD/INR pair holds above both the rising 50- and nine-day Exponential Moving Averages (EMAs), keeping the recent breakout sequence intact after rebounding from the 91.00–91.25 area. Momentum remains positive with the 14-day Relative Strength Index (RSI) near 72 and pushing deeper into overbought territory, signaling firm upside pressure even as the rally becomes stretched.
The USD/INR pair targets the all-time high of 92.81, reached on March 9, followed by the ascending channel’s upper boundary at 92.90. On the downside, primary support lies at the nine-day EMA at 92.23. A break below this level would weaken the short-term momentum and expose the 50-day EMA at 91.17, followed by the channel’s lower boundary near 90.90.
(The technical analysis of this story was written with the help of an AI tool.)
Risk sentiment FAQs
In the world of financial jargon the two widely used terms “risk-on” and “risk off” refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.
Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.
The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.
The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.
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