Fundamental Overview

US Dollar

The US dollar weakened broadly during the latter part of last week. The sell-off initially stemmed from the FOMC rate decision, where additional dissent from Federal Reserve's Kashkari was not interpreted as a significant hawkish surprise.

On Thursday, heavy dollar-selling flows emerged following currency market interventions by Japan and South Korea. Losses deepened on Friday when reports confirmed that the US Treasury had participated in the intervention—marking the first joint operation of its kind since 2011, when G7 nations coordinated to curb yen strength following the Tohoku earthquake. Both Japan's Ministry of Finance and US Treasury Secretary Bessent have stated they would not hesitate to conduct further joint interventions if necessary.

With USD/JPY now trading around April–May levels, the likelihood of another near-term intervention appears diminished, suggesting the dollar should return to trading on underlying fundamentals. Market participants are now awaiting US CPI data and further developments surrounding US–Iran tensions. A de-escalation scenario would likely keep the dollar under pressure by easing inflationary concerns and reducing the probability of rate hikes. Conversely, an escalation would likely lend support to the greenback on the back of Federal Reserve tightening risks.

Indian Rupee

The Rupee has drawn support from the absence of major hawkish surprises at the FOMC decision, substantial US dollar-selling flows, and positive US–Iran headlines. In retrospect, the Reserve Bank of India's intervention near record lows proved well-timed. Looking ahead, however, the Rupee would require a dovish repricing of Fed interest rate expectations and further de-escalation in the Middle East to sustain its gains. India's status as one of the world's largest crude oil importers means that energy price movements remain a critical sensitivity for the currency, as higher oil costs widen the current account deficit and pressure the rupee.

The RBI rate decision is scheduled for Wednesday, with the repo rate—the rate at which the central bank lends to commercial banks—widely expected to remain unchanged at 5.25%. The Monetary Policy Committee is anticipated to maintain its neutral stance. The RBI may adopt a cautionary or slightly hawkish tone, and some investment banks expect the central bank to signal that continued global volatility or sustained increases in crude oil prices could necessitate rate hikes during the second half of FY27 (India's fiscal year running April 2026 through March 2027).

From a broader structural perspective, the Indian Rupee remains in a bearish trend against the US dollar. Dip-buyers are likely to continue seeking opportunities around key technical levels to push the USD/INR pair toward new highs.

USD/INR Technical Analysis — Daily Timeframe

On the daily chart, USD/INR extended its decline below the key 96.10 support zone, driven by heavy dollar-selling flows tied to FX interventions. Price is now approaching the next significant zone around the 95.10 level, where buyers are expected to step in with defined risk below support, positioning for a potential rally back toward the 96.10 resistance. Sellers, conversely, will be looking for a further breakdown to increase bearish positions toward the 94.00 handle.

USD/INR Technical Analysis — 4-Hour Timeframe

The 4-hour chart shows price action forming a potential falling wedge, a pattern generally associated with reversal signals as it indicates waning momentum. Sellers are likely to continue leaning on the upper trendline with defined risk above it, aiming to push toward new lows. Buyers will be watching for a breakout to accumulate positions targeting a rally into the 96.10 resistance.

USD/INR Technical Analysis — 1-Hour Timeframe

On the 1-hour chart, sellers are expected to find a more favorable risk-to-reward setup near the upper trendline, while buyers will likely either await a breakout or monitor for a drop into the 95.10 support zone.

Upcoming Catalysts

• Today: US ISM Manufacturing PMI
• Tomorrow: US Job Openings data
• Wednesday: RBI rate decision, US ADP employment report, and ISM Services PMI
• Thursday: US Jobless Claims figures
• Friday: US Non-Farm Payrolls (NFP) report