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A dollar rally, set off post the Fed meeting last week, dragged other currencies. While the rupee lost 0.3 per cent over the past week, it was neither the best nor the worst performing Asian currency.
On one hand, the appreciation in dollar weighed on the Indian currency and on the other, there were foreign outflows. As per the NSDL (National Securities Depository Limited) data, the net FPI (Foreign Portfolio Investors) outflows, since last Tuesday, stands at nearly $1 billion.
In addition to the above, the rising crude oil prices is another factor that rupee bulls are fighting.
The selling pressure due to above reasons dragged the rupee to a low of 83.43 on Friday, just short of the all-time low of 83.48, made in November last year. The local currency has now managed to avoid marking fresh lows. Yet, with the above factors at play, rupee has considerable challenges ahead.
Below is an analysis of charts of the rupee and the dollar.
Chart
The chart of the rupee appears bearish. However there is a key support between 83.45 and 83.50, which, as of now, is holding well. In case rupee slips below 83.50, it will increase the probability of a decline to 83.80 and then to 84 in the near-term.
But if the Indian unit manages to hold on to the support and rallies, it will face resistance at 83.25. Resistance above this level is at 83 and 82.85. But rupee crossing over 83.25 is less likely.
The dollar index (DXY) bounced off 103.25 and registered a one-month high of 104.50 last Friday. It is now hovering around 104.15. Since 104.50 is a resistance and 103.60 is a support, DXY will most likely stay within these levels in the next few sessions.
Outlook
The downswing in the rupee has lost some momentum and the dollar is likely to stay muted, as the chart indicates. Therefore, the USDINR pair could oscillate within 83.25 and 83.40 in the short-term. But note that the risks are inclined to the downside for the rupee.
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