The USD/INR is triggered by the rebound to the price of oil, the outputs of FII and the recovery of the dollar.

• The USD/INR shoots more than 0.6% to about 86.25 due to a strong recovery of the US dollar, the rally in the price of oil and the sale of shares by the FIIS.
• Tensions in the Middle East have increased the demand of the US dollar as a safe refuge.
• The price of oil shoots more than 7% while Israel attacks Iran.

Indian rupee (INR) falls to about 86.25 against the US dollar (USD) on Friday. The USD/INR torque is triggered since Indian rupee works below expected due to multiple winds against, including the soft data of the Indian consumer price index (CPI) for May, a remarkable upward movement in the price of oil and a feeling of the bleak market in the middle of the tensions in the Middle East, and the sale by foreign institutional investors (FIIS) in the market Indian. Another reason behind the strong upward movement is the solid recovery of the USD, driven by an increase in the demand for safe refuge assets.

The data showed on Thursday that the interannual ICC rose 2.82%, the lowest level seen in more than six years. Economists hoped that retail general inflation would have grown by 3%, slower than 3.16% in April. This is the fourth consecutive month in which the CPI General has been below the 3.7% target of the Indian Reserve Bank (RBI) for the current fiscal year, which was established last week after anticipating cuts in interest rates.

According to the CPI report, the deceleration of food inflation contributed significantly to cooling broader price pressures. Food inflation grew at a modest rhythm of 1%, the lowest level seen since October 2021.

The scenario of cooling of inflationary pressures would increase market expectations that the RBI will cut interest rates again this year. At the policy meeting last week, the governor of the RBI, Sanjay Malhotra, changed the policy position of “accommodation” to “neutral”, citing that there is little room for a greater expansion of monetary policy.

Meanwhile, the increase in oil prices and the bleak mood of the market due to tensions in the Middle East region have significantly weighed on Indian rupee. The highest prices of oil are unfavorable for the Indian currency, since India is one of the world’s largest oil importers. In addition, the attractiveness of the perceived currencies, such as Indian rupee, decreases amid geopolitical tensions.

In the investment front, the FIIS have withdrawn Indian actions in cash for a value of 3,548.87 million rupees until June 12, since the benefits is activated after a strong recovery in the NIFTY50 since April. The exit of foreign currencies is an unfavorable scenario for Indian rupee.

What moves the market today: Indian rupee faces multiple winds against

• The US dollar attracts substantial offers on Friday, tensions in the Middle East have increased their demand as a safe refuge. He US dollar index (DXY), which tracks the value of the dollar against six main currencies, rises 0.35% to about 98.20 from its minimum of three years of 97.60 registered on Thursday.
• Earlier on the day, Israel attacked several military and nuclear bases in the northeast of the Iranian capital, Tehran, in which the head of the Revolutionary Guard, Hossein Salami was killed. Tel Aviv has confirmed that this is a unilateral military attack against Iran, with the aim of “reducing the Iranian threat to Israel’s survival,” The Guardian said. Meanwhile, Israel’s Prime Minister Benjamin Netanyahu has confirmed that his so -called “Ascending León Operation” will continue for “many days.”
• During the negotiation hours in Asia, the US president, Donald Trump, declared that Iran “can’t have a nuclear bomb” while reiterating their hopes of a “peaceful end to tensions.”
• In the domestic front, the main trigger for the US dollar will be the announcement of the Federal Reserve (FED) monetary policy on Wednesday, which is expected to keep the Central Bank to maintain stable interest rates in the current range of 4.25%-4.50%.
• Investors will closely follow the Fed guide on monetary policy perspectives for the rest of the year. According to the CME Fedwatch tool, the Fed is expected to begin reducing interest rates from the September policy meeting.
• On Thursday, US President Donald Trump reiterated criticism of the Fed position to avoid any monetary policy adjustment at this time after the publication of the May Price Price Index (IPP) of May, which showed that the producer’s inflation grew at a slower pace than projected. “Upload their rates. They don’t have to keep them up here. If it goes to [la inflación] go up, I agree with what they go up-but it is [la inflación] Go down, and we are going to finance, and you may have to force something, “Trump said in the White House, Reuters reported.

Technical Analysis: The USD/INR shoots above 86.00

The USD/INR recovers the losses seen in recent weeks and jumps above 86.00 during negotiation hours in Asia on Friday. The pair bounces sharply after discovering a strong purchase interest slightly below the 20 -day exponential (EMA) mobile average, which currently ranges around 85.75.

The 14 -day relative force index (RSI) jumps to about 56.00. A new bullish impulse would arise if the RSI breaks above 60.00.

Looking down, the 20 -day EMA is a key support level for the torque. Upwards, the maximum of May 23, 86.44 will be a critical obstacle to the torque.