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The Indian rupee is trading stable, but is struggling to gain momentum. The currency strengthened to 73.09 on Wednesday, but failed to sustain higher.
It had reversed lower again from those highs, giving back most of the gains and closed at 73.46 on Monday, up 0.14 per cent for the week.
Oil supports
Crude oil prices extending its fall for the third consecutive week has eased the pressure on the rupee. Oil prices tumbled over 5 per cent intra-week last week.
The WTI Crude Oil prices tumbled from around $69 per barrel to a low of $65.75 in the past week.
The prices, however, recovered from the lows, and are currently trading at $67.5 per barrel.
If oil reverses higher in the coming days, it will bring back the pressure on the rupee. In such a scenario, the possibility of the rupee declining below 74 again cannot be ruled out.
On the other hand, the strength in the US dollar is capping the upside, and is also restricting the pace of the upmove in the rupee.
The US dollar index surged breaking above the key resistance level of 96 and made a high of 96.86.
The index has, however, come off slightly from the highs and is currently trading at 96.35. The index has key support in the 96.15-96.00 region, which is likely to limit the downside in the near term. Resistance is at 97.
A strong break above it can take the index higher to 98. Such a rally in the index can cap the strength in the rupee in the coming days.
The Indian rupee seems to be stabilising, and consolidating in a sideways range between 73 and 74 over the last couple of weeks. Key support is at 74 and resistance is at 72.9.
The rupee can remain range-bound between 72.9 and 74 for some time. A breakout on either side of 72.9 or 74 will then determine the next move.
A strong break below 74 can drag the rupee lower to 74.5 and 74.6 in the short term.
On the other hand, a strong break above 72.9 will bring fresh momentum to the rupee.
Such a break will see the currency appreciating towards 72 and 71.8 against the US dollar in the coming weeks.
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