US Dollar vs. Indian Rupee – What will the US Dollar be worth next week?

The dollar index struggles to post a strong follow-up rise. The resistance at 106 mentioned last week has held very well. The index hit a high of 105.88 and fell sharply to end the week on a flat note. US Treasury yields fell sharply last week as market sentiment turned sharply risk-off following the collapse of the Silicon Valley bank. This unexpected development in the US has shifted market expectations of rate hikes.

Federal Reserve Chair Jerome Powell said last week that if the data warrants it, even faster rate hikes are possible in the future. This had raised hopes that the Fed could hike rates by 50 basis points (bps) this month. But after the collapse of the Silicon Valley bank, the market now expects the Fed to slow down and continue with a hike of just 25 basis points.

Under these circumstances, Tuesday’s release of key consumer price index (CPI) data is due. The result of this data must be observed closely.

Still enough

As expected, the dollar index (104.58) is oscillating in the 104-106 range. This keeps the immediate outlook for the greenback mixed.

As mentioned last week, we need to wait for a breakout on either side of 104-106 for an indication of the next move. A break below 104 would be bearish. Such a break can drag the dollar index to 102 and even lower. From an overall perspective, this will also indicate the resumption of the general downtrend that has been in place since 2022.

On the other hand, if the index breaks through the 106 mark, a rise to 108 is possible. However, given the current scenario, a strong positive trigger is needed to break above 106.

So either the index stays within the 104-106 itself for some time or falls below 104. The weakness in yields leaves the chances for the dollar index to continue falling from here.

More autumn

The 10-year US Treasury yield (3.7 percent) fell on Friday after trading in a narrow 4 percent range through Thursday. It closed the week at 3.7 percent.

The outlook for this week is bearish. Strong resistance stands at around 3.9 percent. The 10-year yield can drop to 3.55 to 3.5 percent or even 3.45 percent from here. After that, the price action needs to be watched closely to see a reversal.

support holds

The Euro (1.0643) continued to trade in the 1.05-1.07 range for the third straight week. Although we will have to wait for a breakout of this range for clarity, the bias is leaning towards a bullish breakout. So a break above 1.07 can push the euro back up to 1.09 and 1.10.

However, if the euro falls below 1.05, it can drop to 1.04-1.0350.

rupee watch

As long as Indian rupee stays above 82.30, prospects for strengthening towards 81-80.75 are bullish

Can strengthen

The Indian rupee (USDINR: 82.05) fell sharply last week as low as 82.29. However, it has managed to bounce back from there, ending the week at 82.05 in the onshore market and 81.96 in the offshore segment.

Price action on the charts continues to keep the odds high for a rupee to strengthen from here. 82.30 level will be a strong support. As long as the rupee stays above this support, the outlook is positive.

Therefore, we stand by our view that the rupee will rise towards 81-80.75 in the coming weeks. As mentioned last week, the 81.00 – 80.75 region is a key resistance that may not be easy to break.