The rupee has been trading flat over the past week against the dollar. On Tuesday it closed at 82.795.

The lack of trend in the Indian currency is despite good FPI (Foreign Portfolio Investors) inflows over the past week. As per the NSDL (National Securities Depository Limited) data, the net FPI inflows over the past week stood at nearly $0.8 billion. The rupee struggled to appreciate as the recent uptick in the US inflation is keeping the dollar on the edge anticipating that the Fed might not slow down the pace of tightening.

That said, the charts continue to show no sign of momentum building up on both sides.

Chart

The rupee, currently trading at 82.7950 remains within the range of 82.40-83. Technically, unless either of these levels are breached, we cannot assume the next leg of trend. Nevertheless, continued test of the support at 83 may not be good as it might give up at some point. That could triggera fresh fall. In such a case, rupee might quickly fall to retest the lifetime low of 83.29. Below that level, it has a support at 83.50.

On the other hand, if the local currency rallies above 82.40, it can gain further ground against the dollar, possibly appreciating to 82. Resistance above this level is at 81.75.

The dollar index (DXY) is currently hovering around 104 after bouncing off the support at 101. But DXY has a strong resistance at 105. It’s breach can intensify the rally. As it stands, it might stay sideways in the coming week. The US Federal Reserve’s minutes of its previous meeting is due for release on Wednesday. That could cause some volatility and impact the dollar index movement.

Outlook

Technically, the rupee-dollar pair is in consolidation phase. It looks to remain range-bound in the coming week as well , between 82.40 and 83. However, the FOMC (US Federal Open Market Committee) meeting minutes, set to be released on Wednesday, might trigger some movement.