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USD/INR gapped higher at 69.78 and rose to 69.875, the highest level since March 11.

India, the world’s fastest growing economy is energy dependent and runs a current account deficit. Hence, oil rally tends to weigh over the Indian rupee.    

Brent oil jumped to five months earlier today after reports that the wires stating that the US is planning to force Iranian oil exports to zero.    

The US reimposed sanctions on Iran’s energy sector in November last year after Trump unilaterally moved out of the nuclear accord. The US government, however, had offered waivers to India, Japan and a few other nations.  

If reports are to be believed then the Trump Administration may no longer grant waivers, creating a bigger supply deficit in the oil market and complicating matters for countries like India.  

A sustained rally  in oil prices could yield a falling wedge breakout on USD/INR’s weekly chart. That would signal a revival or continuation of the rally from the low of 63.25 seen in January 2018 and create room for re-test of record highs above 74.00 over the next few quarters.  

Weekly chart

Trend: Bullish above falling wedge resistance