The rapidly unfolding events in Europe kept financial markets riveted over the past week. Concerns regarding Greece abated after the referendum on the bailout package was called off and the Greek Prime Minister agreed to step down in favour of a coalition government. But the relief was short-lived as Italian politics has now taken centre-stage with the Italian Prime Minister, Mr Silvio Berlusconi, facing a vote on the budget that could destabilise the fragile economic and political situation in the country.
The Indian currency has also been closely following global developments. It moved slightly above 49 against the dollar as Greece's troubles receded, but declined lower again when Italy's concerns reared their head.
The dollar has been surprisingly unaffected by the ongoing drama in Europe. The dollar index moved between 76.5 and 77.5 over the past week. Resistance for the short-term is at 77.9. Move above this level will mean that the index can proceed towards its recent peak at 79.8.
The short-term trend is currently sideways in the zone between 48.6 and 50.3. If the Indian currency continues to struggle to move beyond 48.6, it will imply the propensity to decline to 50.1 or 51.1 in the weeks ahead.
In the days ahead, the rupee will receive support at 49.7. Reversal from here will result in the currency moving higher to 48.6 or 47.8 in the upcoming weeks.
USD-INR futures : Was stuck in a narrow band over the past few sessions. The contract could move up to 49.8 in the upcoming sessions. Traders can book profit if it fails to clear this level. Target above 49.8 is 50 and then 50.4.
Short-term supports would be at 49.1 and 48.8.
EUR-INR futures: Continued to hover around the 68 level. The short-term trend in the contract continues to be down and traders can hold their shorts with stop at 68.5. Subsequent resistances will be at 68.9 and 69.7.
If the contract moves lower, it can decline to 67.4 or 66.9 in the days ahead. Key medium-term support for this contract is at 65.5.
GBP-INR futures : Currently in a short-term range between 77.5 and 80. The contract is approaching the upper limit of this range. Traders can, therefore, take some money off the table if it reverses lower from the resistance around 80 again. Fresh long positions are recommended only on a break above 80. Next targets are 81.6 and 83.1.
Supports for the upcoming sessions will be at 77.5, 76.8 and 76.5.
JPY-INR futures : Declined to a low of 61.8 on October 31 and is moving sideways currently. Traders can continue to hold their shorts with stop at 63.8. Downward targets are 61.8 and 61.5.