According to TrendKia, the US Dollar Index (DXY), which tracks the Greenback against six major currencies, is trading firmly near 101.00, marking its highest level in over a year. The US Dollar continues to outperform its global peers, driven by market confidence that the Federal Reserve (Fed) will implement several interest rate hikes throughout the year.
Forecast from Bank of America
Analysts at Bank of America (BofA) anticipate the Fed will deliver three interest rate hikes of 25 basis points (bps) each during the September, October, and December meetings. BofA noted that current data does not support rate cuts, highlighting that core inflation remains elevated and rising. They pointed to the solid April jobs report and hawkish rhetoric from Fed officials as key drivers for this shift in policy expectations.
Global Oil Market Developments
In Tuesday’s opening trade, the MCX Crude Oil contract expiring on July 20 saw a 0.4% increase to roughly 7,010, though it remains close to the three-month low of 6,897 recorded last week. Oil prices have faced downward pressure due to ongoing technical talks between the US and Iran. TrendKia reported that US Vice President (VP) JD Vance confirmed progress in these discussions, noting that Tehran has agreed to allow International Atomic Energy Agency (IAEA) inspectors back into the country, calling it a major milestone for nuclear non-proliferation.
India’s Economic Performance
For an energy-dependent economy like India, the moderation in oil prices is viewed as a positive development. Meanwhile, preliminary HSBC Purchasing Managers' Index (PMI) data for June indicates that growth has slowed in both the manufacturing and services sectors. The Composite PMI dropped to 57.4 from 59.3 in May. Pranjul Bhandari, Chief India Economist at HSBC, noted that while private sector activity softened and manufacturing output decelerated, export orders remain resilient, suggesting continued strength in the manufacturing sector ahead.
Technical Outlook for USD/INR
The USD/INR pair is trading relatively flat near 94.65, showing a bearish near-term bias. The price is currently positioned below the 20-period Exponential Moving Average (EMA) of 94.9856 and below a broader downward resistance trend line at 95.57. With the Relative Strength Index (14) hovering just under the 50 level, upward momentum appears to be waning. Immediate support is watched at the 94.22 level; a breach below this could trigger a deeper retracement. Conversely, the price faces initial resistance at the 20-period EMA near 94.99.
Note: Technical analysis for this article was generated with the assistance of an AI tool.
