Indian Rupee gains further as US midterm elections keeps US Dollar under pressure

The Indian Rupee has strengthened against the US Dollar as the US midterm elections have kept the Dollar under pressure, according to early trends. In the opening trade, the USD/INR pair fell 0.1% to around 94.60, with the US Dollar Index (DXY) dropping 0.4% to near 101.48. Democrats are leading in the Senate with 50 majority seats and 184 seats in the House out of 435 total seats.

A Democratic victory in both the House and Senate could have a significant impact on the US Dollar. Financial experts warn that fears of stricter regulation could negatively affect AI stocks, while markets may price in greater risks of decision-making deadlock regarding government funding and the debt ceiling. However, ING dismisses concerns of a structural shift in the Dollar, stating that it continues to respond mainly to Fed policies.

Investors will closely monitor key US economic releases, such as the Nonfarm Payrolls (NFP) data for October and the ADP Employment Change for October, which will provide insights into the Federal Reserve's (Fed) interest rate expectations. The daily USD/INR chart is trading at 94.7405, maintaining a bearish near-term bias as it remains below the 20-day exponential moving average (EMA) at 95.1559.

The pair has retreated from recent highs and is capped by this dynamic resistance, with the RSI around 37 indicating lingering downside pressure. On the upside, immediate resistance is at the 20-day EMA near 95.16, which a daily close above would help alleviate the current downside bias and enable a recovery phase.