RUPEE WATCH

Rupee can gradually weaken towards 83.60 as long as it stays below 83.40

ABOVE SUPPORT

The US 10Yr Treasury yield (4.49 per cent) has a very strong support around 4.4 per cent, which is holding well for now. On the charts, the outlook is bullish - to see 4.6 per cent. A break above 4.52 per cent can trigger this rise. A further break above 4.6 per cent will boost the bullish momentum. Such a break can take the US 10Yr yield up to 4.8 per cent and 4.9 per cent in the coming weeks.

The outlook will turn negative only if the yield declines below 4.4 per cent. In that case, a fall to 4.3-4.2 per cent can be seen.

RESISTANCE AHEAD

The euro (EURUSD:1.0771) has risen back from the low of 1.0725 last week. However,

strong resistance is in the broad 1.08-1.0850 region, which can cap the upside. As long as the euro stays below 1.0850, the bias will remain negative to break below 1.07. Such a break can take the currency down to 1.06 initially and then to 1.0450 eventually in the coming weeks.

A strong break above 1.0850 is needed to strengthen the bullish case for a rise to 1.10-1.11 again.

NARROW RANGE

The Indian rupee (USDINR: 83.50) was stuck in a narrow 10-paise range of 83.4283.52 last week. Within this, it has closed at the lower end the range at 83.50 on Friday. On the charts, it looks like the rupee can gradually move down towards 83.60 as long it stays below 83.40. A break below 83.60 can drag the rupee down to 83.80.

Rupee has to get a sustained break above 83.40 to move up towards 83.30 and 83.20.