For a currency that spent much of the year under pressure, the rupee's latest move has brought some relief. The harder question now is whether the rally has room to run, or whether it has moved too far, too fast.

The Indian rupee appreciated by 25 paise to 93.68 against the US dollar in early trade on Monday, helped by a decline in crude oil prices, improving foreign fund inflows and hopes of de-escalation in West Asia. The gain extends a sharp recovery: the currency surged 43 paise on Friday and recorded its strongest weekly advance of 2026 last week, appreciating about 1 per cent to reach its highest level since April.

Experts said the USD/INR pair opened near 93.90 and was trading around 93.70, after breaking below the 94.40-94.50 range. The 94 level, which had previously acted as support, has now turned into immediate resistance. The 93.90-94.00 zone is the first hurdle for the pair, followed by the 94.40-94.50 band. On the downside, immediate support is placed at 93.40-93.50, followed by 92.90-93.00.

For readers, the charts work in reverse: a falling USD/INR pair means a stronger rupee. That makes the current signals a mixed blessing. The Relative Strength Index (RSI) near 25 indicates deeply oversold conditions for the pair, while the Moving Average Convergence Divergence (MACD) continues to signal strong bearish momentum. In simple terms, the dollar's slide remains intact against the rupee, but a technical rebound cannot be ruled out.

Oil and geopolitics hold the key

For India, a major energy importer, crude remains the variable to watch. Brent crude was trading 0.15 per cent lower at $98.17 per barrel in futures trade on Monday, and easing concerns over India's energy import exposure have supported the currency. Even so, oil close to $100 a barrel leaves limited comfort.

Sentiment improved after US President Donald Trump indicated over the weekend that further military strikes against Iran were unlikely if negotiations over its nuclear programme and the Strait of Hormuz made significant progress. He also noted that the conflict had pushed up oil and gasoline prices, contributing to Republican losses in the midterm elections. Any setback in those talks could quickly test the rupee's gains.

The other pressure point lies with the Federal Reserve. The US dollar index slipped towards 102 but retained most of its previous gains after stronger-than-expected employment data reinforced expectations of tighter monetary policy. Markets now see an approximately 81 per cent probability of a Fed rate hike in December, compared with 71 per cent before the employment report.

The near-term bias for USD/INR remains bearish, which favours the rupee. Its next test is whether foreign inflows and softer oil can outweigh a Federal Reserve that may yet tighten.

With inputs from IANS