- The Indian Rupee gains further against the US Dollar due to lower oil prices.
- The risk premium on oil prices erodes due to hopes for US-Iran diplomacy resolution.
- US midterm elections are the next key trigger for global markets.
The Indian Rupee (INR) extends its winning streak against the US Dollar (USD) for the third trading day on Tuesday. As of writing, the USD/INR pair is down 0.15% to near 94.75.
The Indian currency strengthens as oil prices continue to face selling pressure on the back of improved hopes for United States (US)-Iran diplomatic resolution.
At press time, the MCX Crude Oil contract expiring on November 19 is up 1.65% to near Rs. 9,222, but is down almost 7.5% from its recent multi-month high of Rs. 9,972.
Oil risk premium eases as diplomacy headlines reshape market tone
According to TD Securities, recent headlines suggesting that US President Donald Trump is willing to give diplomacy more time, and "signaling attacks may not be imminent immediately before/after the midterms," have already seen "a portion of the geopolitical risk premium priced out of crude oil and petroleum products." The strategists add that "with flows elevated, and a large portion of recent upside attributed to a risk premium, these headlines will have an increasingly large impact on the market," as positioning and sentiment adjust to the evolving geopolitical narrative.
However, TD Securities has cautioned that “headlines alone are unlikely to shed the whole risk premium.” TD Securities adds that “so long as there is no concrete conclusion to the war, and tanker and Houthi attacks remain prevalent, we do not anticipate a complete erosion of the risk premium via diplomacy headlines alone,” underscoring that persistent geopolitical threats continue to underpin pricing.
Lower oil prices bode well for currencies from economies, such as India, which rely heavily on oil imports to meet their energy needs.
Investors brace for US midterm elections
Strategists at Brown Brothers Harriman (BBH) note that “the US midterm elections will be held on Tuesday,” with “Democrats widely expected to win the House of Representatives.” They add that “Senate control is much closer, but the tide favors the Democratic Party,” as “Democrats need a net gain of four seats to secure a majority in the Senate” — a target that is “within reach as Republicans are defending six of the seven toss-up seats.”
BBH highlights that betting markets “favor a Democratic sweep,” with Polymarket and Kalshi “putting the odds around 70%.” In their view, that “points to a relatively muted initial market reaction if Democrats win both chambers,” whereas “a Republican Senate hold would be the bigger surprise and could spark more market volatility.”
Technical Analysis: USD/INR sees more downside towards 94.16
In the daily chart, USD/INR trades at 94.75, keeping a bearish near-term tone as spot holds beneath the 20-day Exponential Moving Average (EMA) at 95.20. The pair’s position under this short-term trend gauge suggests rallies remain capped, while the Relative Strength Index (14) at 37.64 stays below the neutral 50 line, hinting at prevailing downside pressure rather than an oversold extreme.
On the topside, immediate resistance is located at the 20-day EMA at 95.21, and a daily close above this barrier would be needed to soften the current bearish bias. On the downside, the June 25 low at 94.16 is the key support level.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
US midterm elections FAQs
The US midterm elections are the federal elections held halfway through a president's four-year term. Voters choose all 435 members of the House of Representatives, about one-third of the Senate, and, in many states, governors and other state and local officials.
Election Day is Tuesday, November 3, 2026. Federal law sets it as the Tuesday after the first Monday in November. Early voting and mail voting are already under way in many states.
They decide which party controls each chamber of Congress for the last two years of President Donald Trump's term. The majority party sets the legislative agenda, chooses committee leaders and, in the Senate, controls confirmations of judges and senior officials.
No. The president is elected every four years; the next presidential election is in November 2028. Midterms are often seen as a referendum on the sitting president's party, which historically tends to lose House seats.
Most analysts expect a modest, short-lived reaction in the US Dollar rather than a lasting trend. A divided Congress is widely seen as the base case and is partly priced in. Treasury yields may react more noticeably to the results. Outcomes that raise expectations of fiscal stimulus tend to lift yields and the US Dollar, while gridlock that limits new spending can pull both lower. Political friction, such as funding or debt-ceiling standoffs, can also briefly lift the Dollar as a safe haven. Over six to twelve months, growth and Federal Reserve policy matter more than the vote.
US stocks have historically been weak before midterms and strong after them. Since 1950, the S&P 500 has been higher 12 months after every midterm election, 19 out of 19, with an average gain of about 15%. Analysts link the pattern to uncertainty fading once results are known. Past performance does not guarantee future returns, and some strategists note that high valuations in 2026 could test the streak.
Markets have often welcomed a divided government because gridlock makes sweeping changes to taxes, spending and regulation less likely. Under a Republican president, the S&P 500 has historically done well in years following midterms that split control of Congress. The risks are funding deadlines, debt-ceiling fights and congressional investigations, which can add short-term volatility.
Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.