Indian Rupee flattens while recovery in oil prices dampens outlook

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The Indian Rupee (INR) trades almost flat against the US Dollar (USD) in the opening session on Tuesday. The USD/INR pair flattens around 95.00, while the Indian Rupee’s outlook has become uncertain as oil prices have bounced back due to fresh concerns over the United States (US)-Iran deal.

The Indian Rupee trades calmly against the US Dollar, while oil prices have recovered due to US-Iran deal uncertainty.
US-Iran negotiations appear to have halted due to the exchange of attacks between Israel and Lebanon.
Investors await the US JOLTS Job Openings data and the RBI policy.

As of writing, the WTI Oil price trades 1.25% lower to near $90, but recovered strongly by over 4.5% on Monday. Theoretically, currencies from economies, such as India, which rely heavily on oil imports to meet their energy needs, tend to underperform when oil prices recover.

US-Iran negotiations toward a deal have been halted

Iran's Tasnim News agency reported on Monday that members of the negotiating team of Tehran have stopped message exchanges with the US through mediators in protest against attacks on Lebanon.

Iran’s Parliament Speaker Mohammad Bagher Ghalibaf also said a post on X that the US naval blockade and war crimes in Lebanon are clear evidence of US noncompliance with the ceasefire. Separately, Iranian Foreign Minister Seyed Abbas Araghchi warned the US and Iran of serious consequences if there were military actions on all fronts, including Lebanon.

Meanwhile, US President Donald Trump has calmed market nerves by expressing confidence, in an interview with ABC News, that an agreement with Iran to extend the ceasefire and reopen the Strait of Hormuz over the next week, adding he had quickly resolved a diplomatic "glitch" that threatened to derail progress.

After threats of consequences to the US and Iran, President Donald Trump stated in a post on Truth Social that the exchange of attacks between Israel and Lebanon has been stopped.

Investors keenly await RBI’s policy

This week, the Reserve Bank of India’s monetary policy announcement on Friday will be the key trigger for the Indian currency. The RBI is almost certain to hold the Repo Rate steady at 5.25% and guide a hawkish stance on the monetary policy outlook, as elevated energy prices have prompted inflationary pressures. Investors will also focus on commentary from RBI Governor Sanjay Malhotra regarding the economic outlook in the wake of the Middle East crisis.

FIIs turned out net sellers on first day of June

Foreign Institutional Investors (FIIs) remained net sellers on the first day of June, offloading their stake worth Rs. 3,911.68 crore in the Indian stock market. Overseas investors have been paring their stake for a long time. Meanwhile, the Middle East tensions-driven energy supply shock has raised concerns over India Inc.'s projected earnings.

US JOLTS Job Openings data in spotlight

In Tuesday’s session, investors will focus on the US JOLTS Job Openings data for April, which will be published at 14:00 GMT. The JOLTS Job Openings data will provide cues regarding the job demand, information that influences the Federal Reserve’s (Fed) monetary policy expectations.

The data is expected to show that US employers posted 6.82 million fresh jobs, close to the March reading of 6.866 million.

Technical Analysis: USD/INR struggles to return above 20-day EMA

USD/INR trades almost flat at around 95.00, keeping a mildly bearish near-term tone as it holds just under the 20-day Exponential Moving Average (EMA) at 95.38. The pair has slipped back from recent highs, and the inability to reclaim the short-term EMA suggests upside attempts are being capped, while the Relative Strength Index (14) near 49.5 hints at fading momentum and a more balanced, consolidative backdrop rather than strong directional pressure.

On the topside, immediate resistance is located at the 20-day EMA around 95.39, and a daily close above this barrier would be needed to ease the current downside bias and reopen the path toward the May 28 high at 95.67. Looking down, the pair could decline towards 94.00 if it drops below the May 29 low at 94.46.

(The technical analysis of this story was written with the help of an AI tool.)

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