The index fell by 1.7 per cent, breaking below
the intermediate support level of 108. It closed the week at 107.44.
This week is packed
with a series of key events and data releases. It will start with the US
Federal Reserve meeting on Wednesday. (29 Jan ’25) Market expects the Fed to
keep rates unchanged in this meeting. It will be followed by the European
Central Bank meeting on Thursday.
Towards the end of the
week, the US Personal Consumption Expenditure (PCE), the Fed’s inflation gauge,
data will be released. All these
guarantee a volatile week ahead.
The sharp fall in the
dollar index (107.44) looks more like a corrective fall within the broad
uptrend. Considering the sustained rise seen so far, the chances are high for
the index to fall more.
The region between
107.75 and 108.25 will now be a strong resistance. The index can fall to 106.
An extended fall to 105 is also a possibility. But, thereafter, the broader
uptrend can resume.
The Indian rupee (USDINR: 86.20) has room to
recover more. Immediate support is at 86.30. Below that 86.45-86.50 is the next
strong support zone.
Rupee can recover
further towards 86.10 and 86 this week. The price action around 86 will need a
close watch. A downward reversal from 86 can drag the rupee down to 86.30 and
86.50 again.
If the rupee manages to breach 86, then it can rise
further towards 85.90-85.85. As such the price action around 86 will need a
close watch this week.
The US 10Yr Treasury
yield (4.62 per cent) is managing to sustain above 4.5 per cent. The chances of
a range-bound move between 4.5 and 4.8 per cent is more likely for some time
now. From a big picture, 4.4 per cent is a strong support. As long as the yield
stays above this support, the long-term outlook will be bullish to break 4.8
per cent. Such a break can take the yield up to 5 per cent. The euro (EURUSD:
1.0497) has risen well, breaking above the key resistance level of 1.0350.
Immediate support is in the 1.0450-1.0400 region. The euro can rise to
1.06-1.0650 in the near term. The price
action thereafter will need a close watch. A break above 1.0650 can trigger
an extended rise to 1.08. Thereafter the broader downtrend can resume.