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The dollar index continued its struggle to breach the psychological 100-mark for the second consecutive week. The index bounced back sharply from a low of 97.92 but failed to breach 100. The price action in the second half of the week indicates the absence of strong buyers to take the index above 100. As such, the overall bearish outlook continues to remain intact for the dollar index.
The coming week has a couple important data releases to watch closely. The US Personal Consumption Expenditure (PCE), the Federal Reserve’s inflation gauge, is due for release on Wednesday. A higher PCE number would help the greenback to move up.
On Friday, non-farm payroll and the unemployment data will be released. A rise in the unemployment rate will signal a slowdown in the US economy. The unemployment rate is currently at 4.2 per cent.
The view remains the same. The dollar index (99.47) has good resistance in the 100-100.50 region. As long as the index trades below this resistance zone, the outlook will remain bearish. The index can fall to 96, a crucial long-term support.
A decisive rise above 100.50 is needed to give a breather. If that happens, we can see a corrective rise to 102.50.
The US 10Yr Treasury Yield (4.23 per cent) failed to sustain the break above 4.4 per cent last week. It touched a high of 4.43 per cent and has come down from there. Immediate support is at 4.2 per cent. But the yield looks vulnerable to break below it. Such a break can take it down to 4 per cent initially. A break below 4 per cent can drag it down to 3.9-3.85 per cent again.
The 10Yr Yield has to breach 4.45 per cent decisively to gain momentum. Only then will a rise to 4.6 per cent and higher levels come into the picture.
The euro (EURUSD: 1.1365) has come-off sharply from the high of 1.1573. Immediate support is in the 1.13-1.1270 region. A break below 1.1270 can take the currency down to 1.1170-1.1150. This 1.1170-1.1150 region is a strong support. A fall below 1.1150 is unlikely.
The euro can rise back from this 1.1170-1.1150 support zone and go up to 1.15-1.16 again. That will keep the broader uptrend intact. From a big picture, the euro has potential to target 1.20 on the upside in the coming months.
The Indian Rupee (USDINR: 85.45) remained volatile and range bound last week. The domestic currency oscillated in a range of 85.03-85.67. The immediate outlook is not very clear. For now, 85-85.70 seems to be the trading range.
The resistance at 85 is holding well. That keeps the chances alive for the rupee to break 85.70 and fall to 86 and 86.30 in the short term.
Rupee has to make decisive break above 85 to gain strength. Only then a rise to 84.60 will come into the picture.
Published on April 26, 2025
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Currency Outlook: Dollar Struggles To Rise – BusinessLine
