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As expected, the currencies seem to have run into a sideways range. The dollar index continued to remain stable, and range bound for the second consecutive week. It looks like some fresh trigger is needed to go either way from here. The dollar index is managing to hold above 102. But at the same time, it seems to lack momentum to see a sustained rise above 103.
On the data front, the US jobs data is due for release on Friday this week. So, until then, in the absence of any unexpected events, the dollar index can continue to stay stable above 102. The overall outlook continues to remain the same for the greenback as mentioned last week.
Mixed outlook
The trading range in the dollar index (102.51) has been narrowed down to 102-103. A breakout on either side of this range will determine the next move. A break above 103 will give some breather to the index. Such a break can take it up to 104-104.50 in the near term. A sustained rise past 104.50 can then boost the bullish momentum. In that case, path will get cleared for the dollar index to test 106-107 on the upside.
On the other hand, a break below 102 can take the index down to 101. A further fall below 101 will be bearish to see 100 and lower levels.
Lacks momentum
The US 10Yr Treasury (3.38 per cent) yield seems to lack a strong follow-through rise above 3.6 per cent. For now, 3.28-3.65 per cent seems to be the trading range. Within this, the price action on the daily chart indicates that the yield can come down towards 3.28 per cent — the lower end of the range. The bias still remains weak. The 10Yr Treasury yield looks vulnerable to break 3.28 per cent and fall to 3.2-3.18 per cent initially and then even 3.1 per cent. Thereafter a fresh bounce is possible. A sustained rise past 3.65 per cent will be needed to avoid the above-mentioned fall.
Resistance holds
The euro (EURUSD: 1.0839) faced resistance near 1.0930 for the second consecutive week. The currency made a high of 1.0926 and has come off from there. Immediate support is at 1.0815. A break below it can drag the euro down to 1.0750-1.0700 this week. A strong break above 1.0930 is needed to take the currency higher to 1.10-1.11.
Hurdles ahead
The Indian Rupee (USDINR: 82.18) seems to be inching up gradually. The currency fell to 82.42 initially, but then managed to recover well from there. It has closed the week at 82.18.
Key resistances are at 82 and 81.90. If the rupee manages to break above 81.90, it can strengthen to 81.70-81.60 this week. That will also keep the doors open for the domestic currency to test 81.50-81.30 as well.
Failure to break the 82-81.90 resistance can keep the rupee in a range of 81.90-82.40 for some time.
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