Forex News
- The Indian Rupee rises against the US Dollar even as oil prices remain higher.
- US President Trump confirmed that the MoU with Iran is over.
- Hawkish FOMC minutes fail to support the US Dollar.
The Indian Rupee (INR) opens higher against the US Dollar (USD) on Thursday. The USD/INR pair drops to near 95.40 as the US Dollar ticks lower; however, the outlook of the pair remains bullish as renewed Middle East hostilities have boosted oil prices.
The higher oil prices narrative is unfavorable for the Indian Rupee, as currencies from economies, such as India, which rely heavily on oil imports to meet their energy needs, tend to underperform in a high-oil-price environment.
In the opening trade, the MCX Crude Oil contract expiring on July 20 holds onto Wednesday’s gains near Rs.7,115. The MCX Crude Oil contract has gained over 10% from its multi-month low of Rs. 6,505 posted last week.
Trump says US-Iran MoU is over
On Wednesday, United States (US) President Donald Trump announced that the memorandum of understanding (MoU) signed with Iran, aimed at ending the Middle East war, is over, after the exchange of attacks between both nations. The US Central Command launched a series of attacks on Iran’s military infrastructure on Tuesday after Tehran struck three commercial ships transiting through the Strait of Hormuz, a critical chokepoint to almost 20% of global energy supply.
Meanwhile, Middle East hostilities have increased as US military forces have started attacking Iranian infrastructure. Earlier in the day, Iranian state media reported that multiple US artillery shells struck a railway bridge west of Aghala in Golestan, triggering several explosions.
Hawkish FOMC minutes fails to support US Dollar
The US Dollar trades marginally lower even as Federal Open Market Committee (FOMC) Minutes of the June policy meeting on Wednesday showed that policymakers continue to see “inflation as the dominant risk”. The minutes also showed that several officials believe further tightening could become necessary.
At press time, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, is down 0.25% to near 100.80.
FIIs continue to raise stake in Indian stock market
Foreign Institutional Investors (FIIs) continue to increase their stake in the Indian stock market despite renewed geopolitical risks. Overseas investors have remained net buyers in all last four trading days, and have raised their stake worth Rs. 3,954.35 crore.
Technical Analysis: USD/INR remains supported by 20-day EMA
USD/INR trades lower at around 95.40 at press time. However, the pair holds a bullish near-term bias as spot hovers above the 20-day exponential moving average (EMA) at 95.10. The pair is also holding the breakout of the Descending Triangle formation, while the Relative Strength Index (RSI) at 54.7 hints at moderately positive momentum rather than overbought conditions.
On the downside, initial support is seen at the 20-day EMA around 95.10, followed by the May 7 low at 94.03. On the topside, the next significant obstacle aligns with the descending resistance trendline starting near 97.08, which caps the broader advance and would need to be overcome to sustain a stronger bullish extension.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Indian economy FAQs
The Indian economy has averaged a growth rate of 6.13% between 2006 and 2023, which makes it one of the fastest growing in the world. India’s high growth has attracted a lot of foreign investment. This includes Foreign Direct Investment (FDI) into physical projects and Foreign Indirect Investment (FII) by foreign funds into Indian financial markets. The greater the level of investment, the higher the demand for the Rupee (INR). Fluctuations in Dollar-demand from Indian importers also impact INR.
India has to import a great deal of its Oil and gasoline so the price of Oil can have a direct impact on the Rupee. Oil is mostly traded in US Dollars (USD) on international markets so if the price of Oil rises, aggregate demand for USD increases and Indian importers have to sell more Rupees to meet that demand, which is depreciative for the Rupee.
Inflation has a complex effect on the Rupee. Ultimately it indicates an increase in money supply which reduces the Rupee’s overall value. Yet if it rises above the Reserve Bank of India’s (RBI) 4% target, the RBI will raise interest rates to bring it down by reducing credit. Higher interest rates, especially real rates (the difference between interest rates and inflation) strengthen the Rupee. They make India a more profitable place for international investors to park their money. A fall in inflation can be supportive of the Rupee. At the same time lower interest rates can have a depreciatory effect on the Rupee.
India has run a trade deficit for most of its recent history, indicating its imports outweigh its exports. Since the majority of international trade takes place in US Dollars, there are times – due to seasonal demand or order glut – where the high volume of imports leads to significant US Dollar- demand. During these periods the Rupee can weaken as it is heavily sold to meet the demand for Dollars. When markets experience increased volatility, the demand for US Dollars can also shoot up with a similarly negative effect on the Rupee.
- Gold price jumps to near $4,110 amid slight weakness in the US Dollar.
- The odds of the Fed hiking interest rates at least once this year have improved.
- The Middle East war could be prolonged as the US attacks Iranian infrastructure.
Gold price (XAU/USD) trades 0.8% higher to near $4,110 during the European trading session on Thursday. The precious metal gains as the US Dollar (USD) is down despite a slight improvement in expectations that the next monetary policy move by the Federal Reserve (Fed) will be on the upside.
At press time, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.1% lower to near 100.95 even after recovering over half of its early losses.
According to the CME FedWatch tool, the odds of the Fed raising interest rates at least once this year have increased to 83.4% from almost 78% recorded a week back.
Hawkish Fed prospects have increased as oil prices have bounced back strongly due to renewed Middle East tensions.
Technically, higher interest rates by the Fed bode poorly for non-yielding assets, such as Gold.
Investors worry that renewed Middle East hostilities will likely be prolonged, as the US military forces have attacked Iranian infrastructure. Earlier in the day, Iranian state media reported that multiple US artillery shells struck a railway bridge west of Aghala in Golestan, triggering several explosions.
On Wednesday, United States (US) President Donald Trump said on the sidelines of the North Atlantic Treaty Organization (NATO) summit that our military forces might hit Iran again and would also attack the power and water infrastructure of the nation, if needed.
Gold technical analysis
XAU/USD trades higher at around $4,110, but maintains a bearish near-term tone as it holds beneath the 20-day exponential moving average (EMA) at $4,153.16. The metal has been unable to reclaim this dynamic barrier, keeping the broader recovery attempts capped, while the Relative Strength Index (RSI) at 43.30 remains below neutral, hinting at subdued bullish momentum rather than a decisive rebound.
On the topside, immediate resistance is defined by the 20-day EMA at $4,153.16, and a sustained break above this level would be needed to ease current downside pressure and open the way for a more constructive bias. Further, the yellow metal could advance to near $4,200.
Looking down, the precious metal could slide to the October 28 low at $3,886.62 if it slides below the June low at $3,941.76.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
- XAG/USD picks up above $59.00 with a bearish bias in play.
- US Dollar's pullback following the release of the Fed's minutes has given some oxygen to precious metals.
- Silver is trading halfway through the last two weeks' trading range.
Silver (XAG/USD) is trimming losses on Thursday, and hitting session highs just above $59.00 after bouncing from $57.22 lows on Wednesday. US Dollar’s pullback has given some oxygen to the battered precious metals, although Silver’s broader trend remains bearish, after having lost more than $3 so far this week.
The White metal is drawing some support from a weaker US Dollar following the release of the Federal Reserve’s (Fed) minutes. The central bank maintained its commitment to fight inflationary pressures, but a split market committee has left investors pondering the timing of the next interest rate hikes.
Furthermore, Iran and the US have exchanged attacks for the second consecutive day, but comments from US President Donald Trump affirming that Iran “wants to make a deal so badly” suggest that Washington and Tehran will return to the negotiating table.
Technical Analysis: Key resistance is at the $62.50 area
XAG/USD trades at $59.13, retaining a bearish near-term bias as it holds halfway through the last two weeks' range, following a nearly 35% sell-off in less than two months. The four-hour Relative Strength Index (14) at 45.32 sits in neutral territory, while the Moving Average Convergence Divergence (MACD) remains negative, hinting that downside momentum is still in play.
On the downside, initial support is seen at the June 24 and 26 lows, at the $55.60-$55.70 area. Further down, the 127.2% Fibonacci retracement of the late June drop, at $51.40, and the late November 2025 lows at $48.64 emerge as the next targets.
On the topside, bulls would need to reclaim Wednesday's highs at $61.00 and the July 6 high in the $62.50 area to ease immediate pressure. In that case, the mid-June highs near $71.75 will come into focus.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
- WTI corrects after two strong rally days and trades around $73.10, down nearly 2% on the day.
- Rising tensions between the United States and Iran continue to support a geopolitical risk premium in the Oil market.
- Concerns over potential supply disruptions through the Strait of Hormuz partly offset the unexpected increase in US Crude inventories.
West Texas Intermediate (WTI) trades lower on Thursday and hovers around $73.10 at the time of writing, down 1.95% on the day as investors take profits following two consecutive days of strong gains. Despite the pullback, downside pressure remains limited as heightened geopolitical tensions in the Middle East continue to underpin Oil prices.
Tensions between the United States (US) and Iran escalated after a new wave of US strikes targeted Iranian positions. In response, Tehran launched attacks against several US military facilities in the Gulf and threatened further retaliation. Meanwhile, US President Donald Trump said that the memorandum of understanding with Iran aimed at easing the conflict was no longer in effect, reviving concerns about a renewed regional escalation.
Markets remain focused on developments surrounding the Strait of Hormuz, a strategic shipping lane through which nearly one-fifth of global Oil supplies transit. Iran's repeated threats to close the waterway continue to fuel concerns over potential supply disruptions, helping to maintain a geopolitical risk premium in Crude Oil prices.
ING analysts believe the market outlook will largely depend on whether Washington and Tehran can quickly de-escalate tensions. The bank also notes that Russia's temporary ban on diesel exports through the end of July is adding to concerns about refined product supplies and could further boost demand for US Crude.
Meanwhile, Commerzbank argues that the market may have underestimated the risks to global Oil supply. According to the bank, the apparent collapse of negotiations between Washington and Tehran highlights that the conflict is far from resolved, forcing investors to once again price in a higher geopolitical risk premium for energy markets.
Wednesday's data from the Energy Information Administration (EIA) showed that US commercial Crude Oil inventories increased by 2.998M barrels in the week ending July 3, marking the first build in 11 weeks and significantly exceeding market expectations. However, the report had little impact on price action, as traders remain primarily focused on geopolitical developments rather than short-term supply fundamentals.
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
DBS Group Research economist Philip Wee notes the US Dollar Index (DXY) slipped from 101.28 to 101 late in the US session, even as the US Treasury 2Y yield rose and crude Oil stayed supported by Middle East tensions. Futures pricing now shows September Fed hike odds above 50%, but FOMC Minutes suggest a divided committee and limited forward guidance from Chair Kevin Warsh.
Middle East stress and Fed repricing
"Although the futures market returned the odds of a September Fed hike above 50%, the FOMC Minutes did not convey the same urgency for one by the divided Fed participants."
"The DXY Index fell late in the US session from 101.28 to 101, decoupling from the higher US Treasury 2Y yield, despite its strong correlation with crude oil prices after President Donald Trump declared that the interim ceasefire agreement with Iran was over."
"However, Trump clarified that the US blockade applied strictly to Iranian ports, and Treasury Secretary Scott Bessent added that safe and secure oil should trade at a premium. Volatile headline risks remain."
"Markets remain mindful that Fed Chair Kevin Warsh will unlikely provide forward guidance at his congressional hearings amid an expected softer US CPI print next week."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
Forex Market News
Our dedicated focus on forex news and insights empowers you to capitalise on investment opportunities in the dynamic FX market. The forex landscape is ever-evolving, characterised by continuous exchange rate fluctuations shaped by vast influential factors. From economic data releases to geopolitical developments, these events can sway market sentiment and drive substantial movements in currency valuations.
At Rakuten Securities Hong Kong, we prioritise delivering timely and accurate forex news updates sourced from reputable platforms like FXStreet. This ensures you stay informed about crucial market developments, enabling informed decision-making and proactive strategy adjustments. Whether you’re monitoring forex forecasts, analysing trading perspectives, or seeking to capitalise on emerging trends, our comprehensive approach equips you with the insights needed to navigate the FX market effectively.
Stay ahead with our comprehensive forex news coverage, designed to keep you informed and prepared to seize profitable opportunities in the dynamic world of forex trading.
