• USD/INR steadies near 86.00, snapping a three-day losing streak after rebounding from 21-day EMA support near 85.80.
• The Indian Rupee weakens despite easing geopolitical tensions, as importer demand for the US Dollar and cautious risk sentiment cap gains.
• Fed Chair Powell maintains cautious tone, signaling not rushing to cut rates, focus shifts to Senate testimony on Wednesday.

The Indian Rupee (INR) weakens against the US Dollar (USD) during European trading hours on Wednesday, surrendering early gains as the Greenback steadies. The Rupee opened on a firm note amid favorable risk sentiment but eased lower through the session as the US Dollar Index (DXY) held its ground near the previous week's low. Meanwhile, Crude Oil prices remain stable after a sharp two-day sell-off, offering limited support to the Rupee.

The USD/INR is showing a mild recovery, halting a three-day losing streak as it rebounds from an intraday low near 85.80. The pair found support at the 21-day Exponential Moving Average (EMA) and is trading around 86.02 at the time of writing, following a shallow intraday bounce.

Geopolitical tensions in the Middle East have eased following a ceasefire agreement between Iran and Israel, bringing some relief to global markets. Oil prices have stabilized after a sharp two-day sell-off, and safe-haven demand has cooled, supporting broader risk sentiment. While the Rupee has moderately benefited from the de-escalation, its response remains subdued. The INR still faces pressure from steady demand for the US Dollar -- particularly from oil companies -- and remains sensitive to shifts in global risk appetite.

Market Movers: Rupee volatility persists; RBI acts on liquidity, Powell holds line

• The Indian Rupee posted its strongest daily gain in a month on Tuesday, though volatility persists with USD/INR swinging between ₹85.80 and ₹86.89 over the past week. The average exchange rate for June so far stands at approximately ₹86.00, aligning with the year-to-date average of around ₹86.10.
• The Reserve Bank of India's (RBI) presence in the currency market has helped anchor the Rupee, with the central bank reportedly intervening through US Dollar sales at key levels to curb sharp depreciation. Market participants expect the RBI to maintain its calibrated approach, managing volatility while safeguarding foreign exchange reserves
• RBI signals liquidity shift, announcing plans on Tuesday to withdraw excess short-term cash from the banking system. The move marks a change in stance after months of liquidity infusions that had eased borrowing costs, potentially impacting short-term Rupee dynamics.
• The Reserve Bank of India aims to take out Rs 1 trillion ($11.6 billion) from the banking system via a seven-day variable rate reverse repurchase auction on June 27. This reverse repo operation, the first since November, is designed to align overnight call rates closer to the repo rate and may inject upward pressure into short-term money market rates.
• In the domestic equity market, the benchmark Sensex jumped 700.40 points to close at 82,755.51, while the Nifty surged 200.40 points to end at 25,244.75, buoyed by improved risk sentiment and easing geopolitical tensions.
• Crude Oil steadies after sharp drop, with Brent hovering near $66.60 and WTI around $64.30 on Wednesday. Prices have stabilized following a steep decline earlier in the week, as easing geopolitical tensions between Iran and Israel reduced fears of supply disruptions.
• Testifying before Congress on Tuesday, Federal Reserve (Fed) Chair Jerome Powell reinforced the Fed's patient approach, signaling that a rate cut in July is unlikely. He emphasized the need for greater clarity on inflation trends and potential impacts from higher tariffs before implementing any policy shift. Powell's remarks suggest that the Fed remains data-dependent, and rate cuts could be delayed until September or beyond. This cautious tone prompted a shift in market expectations, with traders dialing back bets on near-term easing.
• Following his appearance before the House on Tuesday, Fed Chair Jerome Powell is scheduled to face the Senate Banking Committee at 10:00 am EST on Wednesday for his semi‑annual monetary policy report.
• The US Dollar Index (DXY) remains firm around the 98.00 level on Wednesday, with traders staying cautious ahead of Fed Chair Powell's second day of testimony. With a relatively quiet US economic calendar, attention turns to May's New Home Sales data due later in the day.

USD/INR technical outlook: Retest in play, pair to trade in short-term range

USD/INR is currently trading around 86.03, retesting the breakout zone after slipping from recent highs. The pair found support near the 21-day EMA at 85.91, which aligns closely with the upper boundary of the symmetrical triangle pattern. The pair recently broke out of a symmetrical triangle but faced resistance below the 87.00 psychological mark, triggering a pullback.

The Relative Strength Index (RSI) on the daily chart is easing, hovering above neutral at 53.02, which indicates a loss of bullish momentum and suggests potential range-bound trading between 85.80 and 86.90 in the near term. A decisive break on either side of this range will likely dictate the next directional bias.