The rupee (INR) has been trading flat against the dollar (USD) for about a month. Despite the Israel-Hamas war-induced volatility in the markets in general, the local currency has managed to stay stable.
Although US Treasury yields rose, it did not lift the dollar, and consequently, there was no downward pressure on the domestic currency. Also, foreign inflows helped the rupee to some extent. The numbers are not strong, though. According to the NSDL (National Securities Depository Limited) data, the net FPI (foreign portfolio investors) inflows over the past week stood at nearly $60 million. On Monday, the rupee ended at 83.19 versus the US dollar.
The charts show a clear lack of trend. Below is an analysis.
Chart
Even though the long-term trend remains bearish, the rupee has been charting a sideways trend for the past one month. It has largely been moving within 83 and 83.30. Technically, the USDINR currency pair ought to move out of the 83-83.30 range to establish a trend.
If the rupee breaks out of the resistance at 83, it can appreciate to 82.70, a barrier. Subsequent hurdles can be seen at 82.50. On the other hand, if the rupee slips below 83.30, it can depreciate to 83.50 quickly. There is a good chance for the downswing to extend to the support band of 83.80-84.
The dollar index (DXY) has softened after marking a high of 107.40 in early October. On Monday, it ended at 105.60. But note that the index has support at 105.50. If there is a rebound, DXY can move up to 106.70, a minor resistance this week. On the other hand, if the support at 105.50 is breached, there could be a drop to 104.50.
Outlook
As it stands, the probability of rupee staying in the range of 83–83.30 is high. If the dollar rebounds, it can drag the rupee to 83.30 from the current level of 83.16. However, it is a wait-and-watch situation whether INR moves out of the above-mentioned range.