- The Indian Rupee recovers further against the US Dollar as the latter underperforms.
- Signs of US-Iran war de-escalation have diminished the US Dollar’s safe-haven demand.
- FIIs’ buying streak in the Indian stock market comes to an end.
The Indian Rupee (INR) extends Thursday’s recovery against the US Dollar (USD) in the opening session on Friday. The USD/INR pair falls further to near 95.22 as the US Dollar weakens amid hopes that the restart of the war in the Middle East between the United States (US) and Iran won’t be prolonged. However, the Indian Rupee could show signs of weakness as oil prices remain higher.
As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.3% lower to near its three-week low of 100.60. The DXY extends its losing streak for the third trading day on Friday.
US confirms technical talks with Iran are still on
According to The Times of Israel, a US official has confirmed that technical talks with Iran remain ongoing, even as President Donald Trump has declared that the Memorandum of Understanding (MoU) with Tehran is over.
Also, US President Trump said late Wednesday that Iran still wants a deal badly, but he does not know whether it will “honor the deal”, CNBC reported.
Though the continuation of US-Iran technical talks signals signs of de-escalation between the two, investors will remain fearful of increasing aggression amid ongoing exchange of attacks.
Late Thursday, the Iranian state media confirmed that US forces struck several more locations in coastal Iran.
Fears of energy supply disruption remain elevated amid US-Iran tensions
Oil prices rebound strongly on Friday after a steep correction the previous day. The WTI Crude Oil contract expiring on July 20 is up over 1.1% to near Rs. 6,930 amid fears that Middle East conflicts could disrupt the overall energy supply.
Currencies from economies, such as India, which rely heavily on oil imports to meet their energy needs, tend to underperform in a high-oil-price environment.
FIIs turned net sellers on Thursday
After remaining net buyers in all trading days of July 3-8, Foreign Institutional Investors (FIIs) turned out to be net sellers on Thursday, offloading their stake worth Rs. 532.86 crore in the Indian stock market.
Moving forward, investors should be prepared for mixed sentiment from overseas investors toward the Indian equity market, as the earnings season of the first quarter of the financial year (FY) 2026-27 has kicked off, with quarterly results from India’s tech giant Tata Consultancy Services (TCS) on Thursday.
Technical Analysis: USD/INR sees more downside to near 20-day EMA
USD/INR trades lower at around 95.222. Still, the pair holds a mild bullish bias as it trades above the 20-day exponential moving average (EMA) at 95.11.
The Relative Strength Index (RSI) staying inside the 40.00-60.00 zone for a long period, with signs of fatigue after a descending triangle breakout, suggests a likely corrective move ahead.
On the downside, immediate support is seen at the 20-day EMA near 95.11, ahead of the former descending trendline break around 94.69, followed by the May 7 low at 94.03. On the topside, a more meaningful resistance reference remains the original descending trendline anchor near 97.02, and only a sustained break above that area would open the door to a stronger bullish extension.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.