Currency Derivatives
The U.S. dollar may begin to trend lower again in the first week of August, after having managed to consolidate last week. The dollar moved sideways against most currencies as financial markets considered the results of the European banking sector stress tests. Mixed macroeconomic data, also kept the dollar from moving out of recent support and resistance levels. Investor focus has shifted towards the possibility that economic activity in the United States will be less robust for the balance year. Recent data has portrayed a slowdown in economic expansion in the United States. The Indian rupee rose to a fresh one-month peak boosted by stronger regional peers, but the local equity market performance would be key for further direction. The downside pressure on the dollar remains due to the perception that the U.S. growth outlook is deteriorating. This has forced the Federal Reserve to keep interest rates low. However in the next few days, if the rupee remains below 46.20-40 region, the bearish view needs to be reconsidered. Supports are seen at 46.47, 46.60 & 47.00 and Resistance seen at 46.50, 46.25 & 46.15.
