The rupee delved below the 50 mark last Friday as importers in a sudden fit of panic rushed to buy dollars. But stability in the equity market and RBI's 0.25 percentage point hike in policy rate on Tuesday helped the Indian currency rally towards 49.5 against the greenback.

The Euro continued to rule strong against the dollar. The global forex market is now eagerly awaiting the outcome of the EU summit that would mull ways to lift the Euro zone out of the current quagmire. The dollar maintained its downward trajectory against most major currencies with the exception of the yen.

The dollar index declined to the low of 75.9 on Tuesday. This is a critical short-term support for the index and any further decline will mean that the index is heading back towards its late-August trough at 73.5.

Dollar-rupee outlook : This pair moved briefly below the short-term support at 50 to record the low of 50.3 last Friday. The rupee can now strengthen towards the key hurdle around 48.6. This level will determine the medium-term trajectory in this pair. Halt here will result in the rupee fluctuating between 48.6 and 50.3 for few more weeks. Such sideways move will imply that the currency can make another attempt to move below 50.5 in the months ahead.

Short-term resistance for this pair is at 49.3. Strong move above will take it to the next hurdle at 48.7. Supports for the days ahead would be at 49.9, 50.3 and 50.5.

USD-INR futures : Achieved our first short-term target at 50.4 before reversing lower this week. Supports for the contract would be at 49.6 or 49.4. Fresh shorts are advised only on move below 49.4 with the next target at 48.8.

Conversely reversal from either of the above-mentioned supports would provide the opportunity for initiating fresh long positions.

EUR-INR futures : Moved in line with our expectation to reverse smartly on October 18. It moved beyond our target of 68.6 to record the high of 69.7. Traders can hold their long positions with stop at 68.8. Subsequent supports are at 68.5 and 68.3.

Immediate target is 69.7. Break above this level can take the contract to 70.4 or 71.3.

GBP-INR futures : Too broke out higher as indicated in our last column. The contract recorded the peak of 79.9 on October 20 and has been moving sideways since then. Traders can buy the contract in declines as long as it trades above 78.4. If the contract holds above this level, it can break higher to 80.2 or 82.4 in the upcoming weeks.

Supports below 78.4 will be at 77.9 and 77.4.

JPY-INR futures : Too achieved our short-term target. But the contract faces resistance in the zone between 65 and 66. Fresh long positions are commended only on a close above 66. Next target for the contract would be at 67.7.

Supports for the contract would be at 64.7 and 64.

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