Indian Rupee Gains As Oil Prices Remain Broadly In Corrective Phase

The Indian Rupee (INR) opens higher again versus the US Dollar (USD) on Tuesday. The USD/INR pair drops to near 95.65 as the Indian currency gains due to the consistent decline in oil prices.

In the opening session, the MCX Crude Oil contract expiring on October 19 is up 1.2% to near Rs. 8,940, but is still close to its 12-day low of Rs. 8,753 posted on Monday.

Lower oil prices bode well for currencies from economies such as India, which rely heavily on oil imports to meet their energy needs.

Oil prices have remained under pressure amid optimism that the supply of energy products from Saudi Arabia would improve, as the nation vowed to explore alternatives to increase oil shipments. However, financial market experts warn that the recent decline in oil prices could be limited due to ongoing tensions between Saudi Arabia and Iran-backed Houthis.

Saudi attacks keep oil downside in check

Analysts at OCBC suggest that crude prices may find "some renewed support after fresh attacks on Saudi Arabia over the weekend," with Houthis claiming missile and drone strikes on Riyadh and an Aramco facility at Yanbu. They note that Saudi authorities reported the attacks on Yanbu and several other locations were "thwarted, with no fresh damage to oil infrastructure" so far. Even so, OCBC argues that "weekend attacks on Saudi Arabia keep supply/geopolitical risks alive, potentially limiting near-term downside in oil prices," and that "further downside in oil may be limited unless Saudi flows normalise and attacks on energy infrastructure subside."

Investors await meeting between US and Gulf leaders

Later in the day, leaders from Gulf nations and the United States (US) are likely to have a meeting on the sidelines of the United Nations (UN) General Assembly in New York. Related parties are expected to discuss possible ways to increase the oil supply through the Middle East. US President Donald Trump is also expected to meet Iranian President Masoud Pezeshkian to talk about ongoing conflicts.

A positive outcome of these meetings would be unfavorable for oil prices, which in turn would ease fears of high inflation expectations globally.

Firm hawkish Fed expectations need to be validated by US data

A string of market experts has explicitly said that the recent strength in the US Dollar is backed by the Federal Reserve’s (Fed) interest rate hike expectations. Last week, the Fed hiked interest rates by 25 basis points (bps) to 3.75%-4.00% and signaled at least one more this year.

Experts believe that firm hawkish Fed expectations need validation by upcoming US data.

Analysts at HSBC note that the USD “strengthened following the decision.” They highlight that “the median 2026 ‘dot’ implies one additional hike before year-end,” with “a significant minority of participants still anticipating a further rate rise in 2027.” HSBC argues that “this path is more hawkish than a ‘one-and-done’ outcome but remains below current market pricing,” meaning they “do not expect a major repricing of rate expectations or the USD.” Instead, the bank expects that “the market’s attention is likely to focus on whether incoming data validate the final projected increase this year,” suggesting any further Dollar gains will hinge on how the data track against the Fed’s projected path.

USD/INR Technical Analysis

In the daily chart, USD/INR trades at 95.65, keeping a constructive bullish bias as it holds above the 20-day exponential moving average (EMA) at 95.53. The pair has reclaimed short-term trend support, and the Relative Strength Index (14) near 58 suggests firm but not overextended upside momentum, hinting that buyers remain in control while avoiding overbought conditions.

On the downside, immediate support is seen at the 20-day EMA at 95.53, followed by 95.00. Looking up, the previous week's high near 96.00 is the key hurdle.