The US dollar has come under renewed pressure despite the lack of progress in US-Iran negotiations and the ongoing closure of the Strait of Hormuz.
What has been weighing on the greenback at the start of the week was news that Iran proposed to reopen the Strait of Hormuz if the US blockade is lifted, with nuclear talks to follow afterward. This continued push toward a diplomatic resolution — rather than an outright military conflict — has supported risk sentiment, as markets increasingly expect a deal to be reached eventually.
On Wednesday, the Federal Open Market Committee (FOMC) is scheduled to deliver its policy decision. Although the Fed is widely expected to keep rates unchanged amid the uncertainty surrounding the US-Iran standoff, there is a risk of a more hawkish tilt given resilient US economic data and elevated energy prices. A neutral Fed stance should not generate significant volatility, but a more hawkish outcome could provide the US dollar with a meaningful boost following its recent selloff.
On the Indian Rupee side, the US-Iran stalemate has triggered another selloff, with the INR erasing all of its gains since the beginning of the month. The currency is likely to remain under pressure for as long as the situation in the Strait of Hormuz stays unresolved.
In the broader picture, the Indian Rupee remains in a bearish structural trend against the US dollar. As a result, dip-buyers are expected to continue looking for opportunities around strong technical levels in an effort to push the pair toward new highs.
USDINR Technical Analysis — Daily Timeframe
On the daily chart, USDINR has risen back above the upper bound of its channel, opening the door for new highs. Buyers piled in on the breakout targeting a fresh record high, while sellers will need to wait for the price to fall back below the upper bound to regain control and target new lows.
USDINR Technical Analysis — 4-Hour Timeframe
On the 4-hour chart, the pair broke through resistance around the 94.00 handle, which should now act as support. If a pullback occurs, buyers are expected to step in around that support level with a defined risk below it, continuing to push toward new highs. Sellers, on the other hand, will be looking for a break below that level to target a move down to the 92.00 handle.
USDINR Technical Analysis — 1-Hour Timeframe
On the 1-hour chart, the price broke above a minor counter-trendline during today's session. More aggressive buyers may enter around current levels with a defined risk below the most recent swing low, though the risk-to-reward setup would be more favorable closer to the support zone.
Upcoming Catalysts
Tuesday brings the US Consumer Confidence report. Wednesday features the FOMC policy decision. Thursday's calendar includes US Q1 GDP, the US Employment Cost Index, and the latest US Jobless Claims figures. The week wraps up on Friday with the US ISM Manufacturing PMI.
Why it matters
The FOMC decision on Wednesday carries asymmetric implications for USDINR: a neutral hold is already priced in and unlikely to move the pair significantly, but a hawkish signal — possible given resilient US data and elevated energy prices — could amplify the rupee's existing weakness beyond what current positioning reflects.
India is a major crude oil importer, making the Strait of Hormuz closure directly relevant to its import bill and current account dynamics; a prolonged closure sustains upward pressure on the rupee independently of any Fed action.
The 94.00 level on USDINR now functions as a technical pivot: its role flipping from resistance to support means traders on both sides of the trade are watching the same reference point, concentrating potential volatility around that handle.
