Risk appetite found a floor last week, as volatility reduced on the measures announced to support the troubled euro-area economies.
In tandem, the rupee failed to convincingly break above 45 and finished the week on a weak note. In the near-term, global uncertainties may continue to cap the downside to dollar-rupee as the market debates the efficacy of the E750 billion emergency fiscal stabilisation fund from the EU and IMF, designed to address euro-area sovereign concerns.
However, a positive surprise could come from a possible yuan revaluation, especially for the Asian currencies. Onshore markets are focused on the ongoing 3G auctions (flows may be spread over weeks though) and the related capital inflows.
Technically, the short-term outlook for USD-INR is mixed. Both stochastics and the RSI are in neutral territory, indicating sideways movement. Immediate resistance is at 45.66, which is the 100-day moving average. On the downside, 44.80 is an important trend support. In sum, USD-INR is likely to trade in 44.80-45.50 range this week.