The USD/INR recovers while the rupee falls through the bouncing of oil and the weakness in the actions

• Indian rupee weakens despite the general weakness of the US dollar, pressed for losses in higher oil shares and prices.
• The USD/INR bounces from the 85.50 support, remains close to the 50 -day EMA.
• An interim commercial agreement is expected between the US and India for July 8, with risks of tariffs and fees of fees of the Fed in the focus.

The Indian rupee (INR) quotes downwards against the US dollar (USD) on Monday, affected by the demand of the dollar at the end of the month, capital exits and a slight rebound in the prices of crude oil. This setback occurs after the rupee registered its best weekly performance since January 2023.

The USD/INR pair is uploading, erasing all Friday losses and quoting around 85.70 at the time of writing. However, the torque remains just below the 50 -day exponential (EMA) mobile average, highlighting a key technical obstacle to the bulls.

Meanwhile, the US dollar index (DXY) opens the week in a flat position, continuing about minimums of several years around 97.00.

Despite the general weakness of the US dollar, the rupee is struggling to capitalize, since internal and technical drivers are guiding the USD/INR. The dollar has finished the last five months in red and is on the way to close this month too.

The expectations of an interest rate cut have intensified in recent days, with the operators now assigning a growing probability to a relief of politics as soon as in September. The market assessment suggests that the probability of a rate cut in July has increased to 21.2%, while the probabilities of a movement in September have risen to 73.8%, according to the Fedwatch tool of the CME Group. This change reflects the reaction of investors to the growing tax concerns, the political pressure on the Fed and an American economic landscape that is softening, all factors that feed the bets that the Fed could begin to loosen the policy before anticipated.

Market movements: Rupia slides, shares fall, oil bounces, industrial production slows down

• Indian stock market indices ended negatively, increasing pressure on the rupee. The Sensex fell 452.44 points, or 0.54%, to close at 83,606.46, while the NIFTY decreased 120.75 points, or 0.47%, to end at 25,517.05.
• “The rupee quoted about 85.70, lowering 0.21%, since the weakness of the capital market and the recent profits led to the benefits and the closure of long positions,“Said Jateen Trivedi, VP Research Analyst – Commodities and currencies in LKP Securities. “The pressure came before a crucial week marked by the publication of the US key data and the end of the 90 -day period for extended tariffs. The rupee is expected to remain volatile within a range of 85.35 to 86.”
• India’s industrial activity lost impulse in May, with industrial production by increasing 1.2% year -on -year, below 2.7% in April and well below the market consensus of 2.4%, according to data published by the Ministry of Statistics and Execution of Programs on Monday. This is the weakest figure since September 2024, when production increased 3.1%. However, manufacturing production grew 2.6% in May, decreasing from 3.4% in April, indicating continuous softness in the manufacturing activity.
• Crude oil prices remain firm after a slight rebound on Monday, with the Brent recovering around $ 67.80. The WTI is around $ 65.50, after a strong mass sale caused by the decrease in tensions between Iran and Israel. While the de -escalated reduced the immediate geopolitical risks, the rebound in prices is keeping the Indian rupee under pressure, since high energy costs continue to affect the commercial balance and feed the demand for dollars by importers.
• This slight rebound, however, occurs in the midst of a growing market awareness on a planned increase of 411,000 BPD in the offer by the OPEC+ in August, the fifth consecutive monthly increase, which could restrict more prices gains.
• The parent company of the energy firm based in the United Kingdom, Prax Group, has initiated insolvency procedures, which generates concerns about the future of its Lindsey oil refinery. The measure follows a growing financial pressure, which led to the designation of the official administrator as a liquidator. While the refinery operations are expected to continue under special management, development raises uncertainty for employees and the stability of the supply chain in general.
• As the July 9 deadline for extended tariff conversations, the president of the USA, Donald Trump, reaffirmed that his administration does not intend to prolong the 90 -day pause, stating that the US will notify the commercial partners “in a few days” on the tariff rates that they could face if you do not reach an agreement.
• The interim trade agreement between India and the United States is expected to be announced as soon as July 8, with sources that indicate that both parties have reached a consensus on key terms. An Indian delegation, headed by Rajash Agrawal, special secretary of the Department of Commerce, has been in Washington to finish the negotiations. Although India is pressing for a complete exemption of the proposed reciprocal tariffs of 26%, US officials seek greater access to the market in sensitive sectors such as agriculture and cars as part of the agreement.
• Looking ahead, the US key data from the US key to the feeling of the market and the expectations of fees of the Fed. After that, the attention will focus on important data in the middle of the week, including the ISM manufacturing and services PMIS, Jolts employment offers and ADP payroll. All eyes will be put in the Non -Agricultural Payroll (NFP) report on Thursday, a key update on the strength of the US labor market.

Technical Analysis: The USD/INR Try the EMA 50 days after bouncing from the 85.50 support

The USD/INR quotes around 85.71 on Monday, testing the 50 -day EMA about 85.72, after bouncing a key support level at 85.50. The pair fell briefly below this area, but failed to maintain the movement, which caused a slight intimate setback.

The recovery occurs after a break below the ascending wedge pattern, pointing out a possible bearish fatigue. The immediate support is maintained at 84.98, while 86.00 is presented as the following resistance. The relative force index (RSI), which remains about 48.85, points to a neutral momentum.

A decisive closure above 50 days could stabilize the perspective, while the inability to stay above 85.50–85.70 could invite a new sale pressure. The operators will probably remain cautious about the high -impact data of the US this week.