Indian Rupee gains further as weak US Dollar and lower oil prices lend support

• Several supportive factors drive further Indian Rupee gains against the US Dollar.
• Lower oil prices and a weaker US Dollar bolster demand for riskier currencies.
• Midterm elections deliver a setback for US Republicans.

A two-month low of 94.32 in USD/INR marks a sixth consecutive trading day of gains for the Indian Rupee (INR) against the US Dollar (USD) on Thursday. Following the setback for United States (US) Republicans in the midterm elections, heavy selling of the US Dollar and a sharp fall in oil prices are supporting the Rupee’s advance.

At the time of writing, a 0.25% decline leaves the US Dollar Index (DXY) near 101.25. The index, which measures the Greenback against six major currencies, remains within reach of the monthly low of 101.10 recorded the previous day.

In the oil market, the November 19 MCX Crude Oil contract has fallen 1.7% to around Rs. 8,222. Over the past few days, prices have dropped almost 17.50% from their recent highs of Rs. 9,972.

For economies heavily reliant on imported oil to cover their energy requirements, including India, cheaper crude provides support for their currencies.

Expectations of Democratic control of both the Senate and the House of Representatives are putting the US Dollar under substantial selling pressure. Such an outcome would likely “lead to gridlock on the debt ceiling, a prolonged government shutdown next year”, ING said. The bank also cautioned that “fears of tougher regulation could weigh on Artificial Intelligence (AI) stocks (we’ve recently seen how that can hit the greenback)”.

US political tensions weigh on Dollar outlook ahead of 2027

The US political landscape may present another medium-term obstacle for the Dollar, according to ING analysts. In their assessment, “the dollar could see a little more weakness into 2027, however, if an emboldened Democratic Party takes greater issue with Republican policy, including deregulation and the AI build-out.” They also note that “the potential for a prolonged government shutdown in mid-2027 adds to the case for a weaker dollar next summer,” underlining their view that mounting political tensions could increasingly undermine demand for the currency.

Republican defeat reduces fears of further Iran war escalation

Oil prices have fallen sharply as the Democrats’ victory in the US midterm elections reduces concerns about a further escalation of the conflict between the US and Iran.

Crude shipments through the Strait of Hormuz have meanwhile returned to near pre-war levels, albeit at greater cost, Reuters reported, citing analysts. The strait is a critical chokepoint for almost 20% of global energy supply.

JP Morgan said: “The resumption of Gulf supply has pushed the global oil market back into surplus after months of disruption caused by the war,”

USD/INR remains under bearish technical pressure

Trading at 94.32 after Thursday’s decline, USD/INR retains a bearish near-term bias below the 20-period Exponential Moving Average (EMA) at 95.08. This dynamic barrier continues to cap the pair. Meanwhile, a Relative Strength Index (RSI) reading of 33.9 sits just above oversold territory, suggesting that downward pressure remains in place but is becoming stretched.

The June 25 low of 94.16 provides the key support level on the downside. For a corrective recovery to become possible, the pair would first need to regain the 20-day EMA near 95.08, its initial resistance, to relieve the prevailing bearish pressure.

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