Comments
The rupee seems to be losing steam over the last couple of days. After making a sharp rise to 83.02 last week, the domestic currency has given back some of the gains in the first two trading days this week. The rupee has fallen back and closed at 83.18 on Tuesday.
This has happened even as the dollar index had weakened over the same period. It could be that the recovery in the crude oil prices over the last few days has been weighing on the rupee. The Brent crude oil prices have risen back well from the low of $80.75 per barrel made on Friday to $83.45 per barrel. If this sustains, the Brent crude oil price can rise further towards $84.50-85 in the near-term. That in turn can take the rupee further lower from current levels.
Data watch
The US Personal Consumption Expenditure (PCE) – the Federal Reserve’s inflation gauge, data release is due this week on Friday. This will be very important to watch. A weak PCE number will be negative for the dollar as the hopes for the rate cuts will increase in the market.
Dollar outlook
The US dollar index (104.38) has important supports coming up at 104.30 and 104. If the index breaks below 104, it will come under more selling pressure. Such a break can drag the dollar index down to 103 in the short-term.
On the other hand, if the dollar index sustains above the 104.30-104 support zone and bounces back, it can get a breather. In that case, the index can rise to 105-105.20. However, a decisive break above 105.20 is needed for the index to become bullish again. Only in that case, a strong rise to 106-107 can be seen again.
As such the price action in the 104.30-104 region will need a very close watch in the coming days.
Rupee outlook
The rupee (USDINR: 83.18) has a strong resistance in the 83.00-82.95. That seems to be holding very well for now. On the charts, the short-term outlook will be bearish as long as the rupee stays below the 83-82.95 resistance zone. The rupee can weaken towards 83.30 in the coming days. A break below 83.30 can drag the domestic currency further down to 83.40 and even 83.50 again.
To negate the fall to 83.50 again, rupee has to sustain above 83.30 and breach 82.95. If that happens, rupee can move up to 82.80-82.70. But as mentioned above 83-82.95 is a strong resistance on the chart. As such a strong trigger might be needed for the rupee to break 82.95 and rise.
Comments
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.