The rupee's winning run against the greenback continued over the past week. The currency recorded a high of 48.6 on Monday and is attempting to steady itself around this level. According to Bloomberg, the Indian currency has outperformed its Asian peers so far this calendar. Continued inflows from foreign institutional investors and strength in equity market are aiding the up-move while demand for dollars from importers is capping the rally.

As Greece continues to vacillate on implementing austerity measures, the euro remained stuck in the band between 1.30 and 1.32 against the dollar. The dollar index too is hovering around the 79 support. As indicated earlier, supports on decline below this level are at 78.2 and 77.4.

Dollar-rupee outlook : The rupee is moving in a very narrow band between 48.6 and 49.2 over the last three trading sessions. There is immediate resistance at 48.6 since the currency made three attempts to move above this level in September and October last year. There is also a gap between 48.3 and 48.7 formed last September that will prove to be a near-term hurdle.

If these levels are crossed, the currency will move towards the next medium-term target of 47.8. Near-term supports for the currency are at 50.2 and 50.8.

Medium-term trend in the currency continues to be up. But the currency has critical resistance at 47.8. Long-term view will turn positive only on close above this level. It is quite possible that the currency reverses lower from this level to decline to 50.8 or 52.1 in the upcoming weeks.

USD-INR futures contract continued its downtrend to hit our second target at 48.8. The contract has support immediately below in the open gap between 48.4 and 48.7. If this zone is breached, then next support is the September low at 47.3.

Short-term resistances would be at 49.6 and 50.1. Traders can square their long positions at either of these hurdles.

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