The rupee appreciated about 0.4 per cent over the past week, supported by positive foreign inflows and a sharp decline in crude oil prices. On Tuesday, it closed at 95.86.Foreign portfolio investors remained net buyers. According to NSDL data, net FPI inflows stood at about $665 million over the past week, taking the cumulative inflows in July to $3.8 billion.Crude oil prices also turned favourable for the local currency. Brent crude futures tumbled nearly 13 per cent so far this week to around $85/barrel after the United States paused attacks on Iran, easing concerns over potential supply disruptions from West Asia.The decline in oil prices is positive for India, a major crude importer, as it reduces pressure on both the trade deficit and the rupee.Market participants are now awaiting the US Federal Reserve’s policy decision on Wednesday. While the Fed is widely expected to leave interest rates unchanged, investors will closely watch the policy statement and Chair Kevin Warsh’s commentary for clues on the future rate path, especially in light of the recent geopolitical developments and their implications for inflation. Overall, improving foreign inflows and softer crude prices have strengthened the rupee’s near-term fundamentals. However, the Federal Reserve’s guidance and the trajectory of geopolitical tensions will remain key determinants of the currency’s next move.The rupee found support at 96.60 last week. After consolidating around this level for a while, it rebounded and is now trading at 95.86. However, the recovery is approaching a key resistance at 95.80, where the 21-day moving average coincides.A breakout above 95.80 can strengthen the recovery, lifting the rupee to 95.40 and potentially to 95.00, the next notable resistance levels.On the other hand, if the rupee fails to breach 95.80, it could retreat to 96.20 or even revisit the support at 96.60. The next move will largely depend on the dollar’s reaction to the US Federal Reserve’s policy decision.The dollar index, currently at 101.55, has been on an uptrend after finding support at 100.50 a couple of weeks ago. However, it is now approaching a key resistance zone between 101.60 and 101.80.If the index breaks above 101.80, it can extend the rally to 103. Such a move could once again bring the rupee’s support at 96.60 under pressure. Conversely, if the dollar index fails to clear the resistance zone, it could correct to 100.80 or even 100.50. In that case, the rupee may appreciate to 95.40 and potentially to 95.00.Rupee OutlookThe rupee has staged a meaningful recovery, but the rally is approaching a crucial hurdle at 95.80. The Federal Reserve’s policy outcome and the dollar index’s reaction will determine whether the local currency extends its gains towards 95 or retreats towards 96.20.Published on July 28, 2026