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Rupee declined to the low of 45.8 against the greenback on Friday as foreign institutional investors went on a selling spree pulling Sensex to eight-month low. Subsequent improvement in sentiment following the end of the Egyptian uprising and decline in crude prices helped the Indian currency recover to 45.4 on Tuesday.
The dollar index traded on ICE moved to the high of 78.9 on a weak Euro. Key resistance for this index is at 79.8. Close above this level will mean that the index is heading towards the peak at 81.6. Conversely decline from current levels can pull it lower towards 77 again.
Dollar-Rupee outlook
The short-term rally in the rupee was arrested at 45.2 and the currency declined to 45.8 against the dollar. But the short-term trend in the currency remains up since the January 31 trough of 46. Targets for the third wave of this move are 45.3 and 45. Inability to move above the first target can result in a sideways move between 45.3 and 45.8 in the short-term.
Medium-term trend in the currency is sideways in the band between 44 and 46.3. However, failure to rally above 45.1 in near-term will keep the currency under duress.
USD-INR futures
USD-INR futures could not penetrate the support at 45.37 indicated in our last column and rallied to our second target at 45.9. Traders should continue to watch out for the support at 45.37 and fresh shorts are suggested only on a decline below with the targets of 45.1 and 44.8.
Short-term resistances for the contract would be at 45.7 and 45.9.
EUR-INR futures
EUR-INR futures moved to the high of 62.7 on February 10 before reversing lower. Since the contract is now rebounding from the support at 61.6, traders can hold their long positions with stop at 61.3. The futures can move higher to 62.1 or 62.6 in the days ahead.
However decline below 61.3 will pull the contract to 61 or 60.4.
GBP-INR futures
GBP-INR futures reversed from the low of 72.8 and remained in the range between 72.8 and 73.8 thereafter. Traders can initiate fresh shorts on a decline below this range with the targets of 72.6, 72 and 71.4.
Short-term resistances would be at 73.7 and 73.9.
JPY-INR futures
JPY-INR futures slid to the key support at 54.6 on Tuesday. Fresh longs are not recommended on a close below this level. Subsequent supports are at 54.4 and 53.8. Short-term resistances are at 55 and 55.4. Traders can initiate fresh shorts on a failure to clear the first resistance.
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