Indian Rupee sustains winning run against US Dollar on lower oil prices

• Lower oil prices support further Indian Rupee gains against the US Dollar.
• Hopes of a diplomatic resolution between the US and Iran reduce oil’s risk premium.
• Global markets look to US midterm elections as the next major catalyst.

A 0.15% decline takes USD/INR to around 94.83 in Tuesday’s opening trade, as the Indian Rupee (INR) records a third consecutive trading day of gains against the US Dollar (USD).

Continued selling pressure on oil is supporting the Indian currency, with hopes rising for a diplomatic resolution between the United States (US) and Iran.

At the time of writing, the MCX Crude Oil contract expiring on 19 November stands near Rs. 9,222, up 1.65%. Despite that rise, it remains almost 7.5% below its recent multi-month high of Rs. 9,972.

Oil sheds risk premium as diplomatic developments shift market sentiment

TD Securities attributes some of the retreat in oil’s risk premium to recent reports that US President Donald Trump is prepared to allow more time for diplomacy. Those headlines, "signaling attacks may not be imminent immediately before/after the midterms," have already resulted in "a portion of the geopolitical risk premium priced out of crude oil and petroleum products." As positioning and sentiment respond to the changing geopolitical backdrop, the strategists argue that "with flows elevated, and a large portion of recent upside attributed to a risk premium, these headlines will have an increasingly large impact on the market,"

Nevertheless, “headlines alone are unlikely to shed the whole risk premium,” TD Securities cautions. Persistent geopolitical threats still support prices, with the firm adding that “so long as there is no concrete conclusion to the war, and tanker and Houthi attacks remain prevalent, we do not anticipate a complete erosion of the risk premium via diplomacy headlines alone,”

For economies such as India, where meeting energy needs depends heavily on imported oil, cheaper crude is supportive of their currencies.

US midterm elections move into investors’ focus

Brown Brothers Harriman (BBH) strategists flag that “the US midterm elections will be held on Tuesday,” and that “Democrats widely expected to win the House of Representatives.” The Senate contest is tighter: “Senate control is much closer, but the tide favors the Democratic Party,” they say. Although “Democrats need a net gain of four seats to secure a majority in the Senate”, BBH regards that goal as “within reach as Republicans are defending six of the seven toss-up seats.”

According to BBH, betting markets “favor a Democratic sweep,” with Polymarket and Kalshi “putting the odds around 70%.” The strategists believe this “points to a relatively muted initial market reaction if Democrats win both chambers,” but warn that “a Republican Senate hold would be the bigger surprise and could spark more market volatility.”

USD/INR Remains Under Pressure Below Its 20-Day EMA

Trading at 94.83 on the daily chart, USD/INR retains a bearish short-term outlook below its 20-day Exponential Moving Average (EMA) of 95.21. That position relative to the short-term trend indicator suggests limited scope for rallies. Meanwhile, the Relative Strength Index (14), at 38.9, remains beneath the neutral 50 threshold, signalling continued downward pressure rather than an extreme oversold condition.

The 20-day EMA at 95.21 provides the first upside resistance; only a daily close above it would temper the prevailing bearish bias. The available dataset identifies no nearby technical support levels, leaving traders to consider recent lows and price action for potential interim floors. Momentum indicators also suggest that rebounds could remain constrained while USD/INR stays below the 95.21 area.

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