The dollar index continued to fall last week thereby keeping the overall downtrend intact. Indeed, the long-awaited fall to 98 also happened last week. The index touched a low 97.60, and then managed to bounce back slightly from there to close the week at 98.18. The US Treasury Yields also fell last week. The 10Yr Yield fell to a low of 4.31 per cent before closing the week at 4.4 per cent.
On the domestic front, the Indian rupee inched higher initially. But the escalating Israel-Iran conflict triggered a sharp fall in the rupee on Friday. The rupee fell about 0.6 per cent on Friday, giving away all the gains made during the week.
Greenback outlook
The downtrend continues to remain intact on the dollar index (98.18). Immediate resistance is around 99. Above that, a cluster of resistances are there in the 99.50-100 region. We expect the dollar index to remain below 99 and fall back again. A break below 98 will then drag it down to 96.
But it is important to note is that 96 is a very strong long-term support which can halt the downtrend. The dollar index can reverse higher from around 96, and rise to 100 over the medium term.
Euro: Gains strength
As expected, the euro (EURUSD: 1.1549) rose to 1.16 breaking above 1.14. The currency touched a high of 1.1631 and then fell back from there to close the week at 1.1549.
The outlook remains positive. Support will now be in the 1.14-1.1350 region which is likely to limit the downside. We expect the euro to breach 1.16 and rise to 1.18. An extended rise to 1.20 is also a possibility which cannot be ruled out.
Yields: Range-bound
The 10Yr Treasury Yield (4.4 per cent) has been stuck between 4.3 per cent and 4.52 per cent over the last couple of weeks. That leaves the outlook mixed. Support is the 4.3-4.25 per cent region. Resistance is in the 4.5-4.55 per cent zone. So, 4.25-4.55 per cent can be the trading range for now. A breakout on either side of this range will decide the next move.
A break below 4.25 per cent will be bearish to see 4.1 per cent and even lower levels. On the other hand, a break above 4.55 per cent can take the yield up to 4.65 per cent. A sustained rise above 4.65 per cent is needed to strengthen the bullish case for a rise to 4.8 per cent and higher.
Rupee: Bearish bias
The Indian rupee (USDINR: 86.09) inched higher initially. It touched a high of 85.42 against the dollar. But the domestic currency fell sharply on Friday on the back of the Israel-Iran conflict. It made a low of 86.20, and recovered slightly from there to close the week at 86.09.
The bias is turning negative. A recovery to 85.80 is a possibility in the near term. But 85.80-85.70 is a strong resistance which can cap the upside going forward. As long as the rupee stays below 85.70, there are good chances to see a fall to 86.60 in the coming weeks.
Published on June 14, 2025
