The dollar index snapped its two-week consolidation and resumed its fall. That keeps the overall downtrend intact. On the charts, there is room for the greenback to fall further from here. However, crucial support is coming up which can halt the current downtrend. So, the price action in the coming weeks will need a very close watch.
The Indian rupee on the other hand witnessed a strong turnaround and rose sharply against the dollar. A sharp fall in the crude oil price aided the rupee to make a strong recovery last week. This has given good relief for the domestic currency.
Dollar outlook
The dollar index (97.25) touched a low of 97 and bounced back slightly from there. The downtrend is intact. There is room to test 96 on the downside.
As we have mentioned over the last few weeks, the level of 96 is a strong long-term support. The chances are high for the downtrend to halt here. As such we can expect the dollar index to reverse higher from around 96. Such a reversal will have the potential to take the dollar index up to 98 initially and then to 100 eventually over the medium term.
So, as the dollar index approaches 96, participants will have to start looking at the market from the buy side.
Bearish breakout
The US 10Yr Treasury Yield (4.27 per cent) has made a bearish breakout of its 4.3-4.55 per cent range. The outlook is negative. Resistance is in the 4.3-4.35 per cent region. The 10Yr Yield can test 4.2 per cent first. A break below 4.2 per cent can drag it down to 4.1 and 4 per cent in the short term.
In case the yield manages to bounce back from around 4.2 per cent, then a corrective bounce to 4.3-4.35 per cent can happen first. Thereafter the fall to 4.1-4 per cent can happen eventually.
Momentum gains
The euro (EURUSD: 1.1715) has risen breaking above 1.16 as expected. That keeps intact our bullish view. The euro can test 1.18 in the near term. A decisive break above 1.18 will have the potential to take the currency up to 1.20 in the coming weeks.
The level of 1.20 is a strong resistance. There are good chances to see a reversal from around 1.20 towards 1.18 and even lower. As such the price action around 1.20 will need a very close watch.
Crucial resistance
The Indian rupee (USDINR: 85.48) has risen sharply breaking above 86 last week. This has given a good relief for the domestic currency. But there is a crucial resistance coming up to 85.20. This level can be tested this week. However, the rupee has to breach this hurdle in order to extend the rise to 84.80 and 84.50.
Failure to breach 85.20 and a reversal from there will increase the danger of the rupee falling back to 86 and lower levels.
So, the price action around 85.20 will need a close watch this week.
Published on June 28, 2025
