Indian rupee weakens slightly and is expected to remain vulnerable through a holiday-shortened week, with oil prices elevated, global bond yields at multi-year highs and rising bets on a Reserve Bank of India rate hike next week.The Indian rupee faces new headwinds at Monday's open with stalled US-Iran talks pushing oil prices higher, while central bank intervention is likely to cushion the currency's decline. For currency traders, the 96-per-dollar mark has become an increasingly important level over the past two weeks, with the Reserve Bank of India repeatedly stepping in when the currency approaches it. The central bank's intervention has so far kept the rupee from sustaining a dip past 96, despite pressure from higher oil prices, rising US Treasury yields and a firmer dollar. The dollar inched higher to hold near a two-month high on Monday, as the US-Iran standoff continued to push up oil prices while investors looked ahead to a data-packed week for more clues on inflation and central banks' moves. The euro and sterling were both 0.1% weaker against the dollar, last at $1.1379 and $1.3232, respectively, hovering near multi-month lows against the greenback. The dollar index , which measures the US currency against a basket of peers, was a touch higher at 101.15 and on track for a 1.7% gain in September, its best month since June. The US 10Y Treasury yield ended Friday at 5.16%, after touching 5.23% (its highest level since 2007), while the 30Y yield rose to 5.49%. The US Dollar Index remained above 101 as markets priced in the possibility of another Fed hike in October. The yen was last down 0.3% at 157.7 per dollar. It gained on Friday after Japan's Finance Minister Satsuki Katayama and US Treasury Secretary Scott Bessent held a call on Friday and reaffirmed that yen undervaluation is a matter of concern and that the two nations intend to strengthen cooperation. The BoJ’s July meeting minutes will be watched today, followed by the Summary of Opinions from its September meeting on Thursday. Intervention concerns are likely to rise if the pair moves back towards 160. EUR/USD is trading below 1.14, due to a stronger dollar. The pair is likely to take cues from Euro Area inflation and US PCE and payroll data. In the near term, we expect the pair to trade in the range of 1.1350-1.1450. Euro Area Inflation: Headline inflation is expected to rise to 3.7% YoY in Sep (vs 3.2% in Aug) largely reflecting higher energy prices, while core inflation is likely to increase to 2.5% from 2.4%. A stronger-than-expected print could reinforce expectations of further ECB tightening. Oil prices climbed more than 1% on Monday with Brent crude futures last above $106 a barrel, after US President Donald Trump rejected a peace deal with Iran to resolve their conflict and reopen the Strait of Hormuz. Energy supply risks and robust fundamentals in the US have heightened inflation concerns and prompted traders to price in a more hawkish Federal Reserve, while elevated long-end Treasury yields also supported the dollar. The greenback could overshoot in the near term if energy market tensions persist and inflation risks continue to build. Gold prices fell more than 2% on Monday as a rise in oil prices heightened inflation concerns and reinforced expectations of further Federal Reserve interest-rate hikes. Spot gold was down 2.1% at $4,198.10 per ounce, as of 0357 GMT, on track for its biggest daily decline since September 1. US gold futures fell 2.1% to $4,231.00. Iran insisted that only diplomacy can solve its conflict with the United States and Israel, after US President Donald Trump said he rejected an Iranian proposal to reopen the Strait of Hormuz and end fighting. Oil prices drifted higher. Among other metals, spot silver fell 3.4% to $62.08 per ounce, platinum was down 2.7% at $1,730.78 and palladium lost 2.8% to $1,231.46. www.eforexindia.com......