The rupee was volatile in the band between 44.1 and 44.7 against the dollar over the past four sessions. Weakness in stock prices and FIIs withdrawing funds from equity market applied downward pressure on the currency while exporters selling dollar prevented a sharp slide.

Global forex markets have also turned choppy of late due to sovereign debt issues in both Europe and the US. Following fears that Greece could be forced to restructure its humungous debt within a few months, Standard & Poor's has threatened to downgrade US' AAA credit rating unless the Obama administration takes steps to rein the budget deficit.

Dollar index traded on InterContinental Exchange reversed higher from the recent low at 74.8. We stay with the view that next support for this index is at 74.1.

Dollar-Rupee outlook

The rupee declined to the support at 44.7 on Tuesday but could not sustain at that level. We stay with the view that the area around 44.75 is key short-term support for this currency pair. Failure to move below it can keep the rupee in the range between 44.75 and 44 for few more weeks.

The area around 44 is likely to act as a strong resistance in the upcoming weeks.

Close below 44.75 can drag the rupee to 45.2 or 46 over the medium-term. The medium-term range for the currency is between 44 and 46. Break-out on either side is needed to signal that a prolonged directional move is in the offing. The long-term trend in the currency however continues to be up.

USD-INR futures

USD-INR futures whipsawed in both directions. It rose to the high of 44.9 last week and then fell to 44.3 on Monday. Key resistance for the near-term is at 44.9 and fresh long positions are advised only on a break above this level with the targets of 45.18 and then 45.4.

Short-term supports for the contract would be available at 44.3 and 44.1. The contract can fluctuate in the band between 44.3 and 44.9 for few more sessions.

EUR-INR futures

EUR-INR futures once more surprised by reversing lower from the peak of 64.7. Immediate supports for the contract are at 62.8 and 62.3. Key medium-term support is however at 61.4.

GBP-INR futures

GBP-INR futures achieved our short-term target at 73 but could not make any further headway. We stay with the view that the contract can move to 73.4 in the near-term. Traders can hold the contract with stop-loss at 72.15. Next support is at 71.5.

JPY-INR futures

JPY-INR futures moved contrary to our expectation to rise to 54.3 on Tuesday. Immediate resistance is at 54.4. Move above this level can take the contract to 56 over the ensuing weeks. Short-term supports will be at 53.3 and 52.7.

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