Pressure on Indian Rupee ahead of Fed’s monetary policy

• Ahead of the Fed’s policy decision, the Indian Rupee weakens against the US Dollar.
• Interest rates are expected to remain unchanged at the Fed meeting.
• Rising oil prices have put the Indian Rupee under pressure.

USD/INR edges up towards 95.16 on Wednesday. The Indian Rupee (INR) reverses its opening advance to trade slightly lower against the US Dollar (USD). A recovery in oil prices and caution before the Federal Reserve’s (Fed) monetary policy announcement are among the headwinds weighing on the Indian currency.

Early trading sees the MCX Crude Oil contract expiring on November 19 rise 1.82% to around Rs. 9,671, approaching its recent highs of Rs. 9,828.

For economies heavily dependent on imported oil to meet energy demand, including India, an increase in oil prices is adverse for their currencies.

Oil rises after Houthis target Saudi Arabia’s largest refinery

Yemen's Iran-aligned Houthis launched a ballistic missile towards the Ras Tanura oil refinery in eastern Saudi Arabia, the kingdom’s largest, a military spokesperson for the group said on Tuesday, according to Reuters.

Crude prices have climbed as the attack heightens concerns that risks to energy supplies could intensify further.

United States (US) Treasury yields have also received support from higher oil prices, reducing the attraction of riskier currencies such as the Indian Rupee. At the time of writing, the 10-year US bond yield has risen 0.46% to approximately 5.02%.

3.75%-4.00% rate range expected ahead of Fed decision

Global markets face a key catalyst later in the day with the Fed’s monetary policy announcement. The CME FedWatch tool indicates expectations that interest rates will be held within the 3.75%-4.00% range.

At its September meeting, the Fed raised rates by a quarter of a percentage point. Its dot plot also indicated at least one further increase this year.

Markets initially viewed another October increase as likely following the September announcement. Hawkish positioning subsequently eased, however, after several policymakers indicated that a further rate rise was not urgent.

8/10 hawkish score: Waller backs further hikes at a slower pace, keeping Dollar bulls alert

An FXS Speechtracker score of 8/10, above the historical average of 7.2/10, marked Fed’s Waller’s message as distinctly hawkish and highlighted a preference for further tightening. His insistence that “more hikes [are] needed”, alongside the qualification that they “do not need to come at consecutive meetings”, points to a higher terminal rate reached through a more flexible sequence of decisions. That combination supports the Dollar through expectations that restrictive policy will last longer, rather than through an aggressive pace of near-term increases. Waller highlighted persistent inflation pressures from AI-related investment, continuing energy shocks and a labour market that remains “solid and stable”. After nearly 5½ years of above-target inflation, those factors reinforce the risk of inflation expectations becoming unanchored and leave the policy bias firmly hawkish.

A 0.42-point increase took the FXS Fed Sentiment Index to 138.34, confirming that the speech shifted the policy tone further into hawkish territory and well above the neutral 100 level. Together with the above-baseline FXS Speechtracker reading, the elevated index should support the Dollar as markets factor in restrictive rates for longer, even without rate increases at consecutive meetings.

95.1355: USD/INR Technical Outlook Remains Bearish

USD/INR is trading at 95.1355 on the daily chart. With spot below the 20-period exponential moving average (EMA) of 95.3253, the near-term outlook remains bearish. Failure to regain this short-term EMA indicates selling into rallies. Meanwhile, a Relative Strength Index (RSI) reading of around 44 lies in neutral-to-soft territory, suggesting limited upward momentum rather than outright oversold conditions.

The 20-day EMA at 95.3253 provides the first upside resistance. A sustained move above it would be required to relieve immediate downward pressure and create scope for a more substantial recovery. Available indicators offer no clearly defined nearby support levels, leaving the pair’s behaviour around this EMA as the main focus. Remaining below that pivot would likely maintain the short-term bearish bias.

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