The rupee continued to strengthen and closed higher against the dollar for the seventh consecutive week.

The currency fell briefly below the 65 mark in the beginning of the past week but recovered thereafter. It regained momentum after touching a low of 65.17 last week, on Wednesday, and rose to a high of 64.15 on Friday.

However, the currency ceded some of the gains and closed at 64.56 on Monday, up 0.72 per cent for the week.

Strong foreign money inflows continue to provide support for the rupee. Foreign Portfolio Investors (FPIs) bought $1.67 billion in Indian debt in the first week of the month.

Increasing inflows helped the rupee remain insulated from the strong recovery in the US dollar over the last couple of weeks.

It also helped shrug off the sudden jitters caused in the markets last week from the missile attack on Syria by the US.

The dollar index rose, after hovering around 100.5 in the initial part of the week, breaking above 101 thereafter as the markets turned more risk-averse after the US attack on Syria.

The index is currently hovering around 101.2 and can rise to test the immediate resistance at 101.6.

A strong break above this hurdle can take the dollar index higher to 102.2 or even 103 thereafter. Such a rise in the dollar index may cap further upside in the rupee.

This week is packed with a series of important macroeconomic data releases on the domestic front.

The Consumer Price Index (CPI) inflation and the Index of Industrial Production (IIP) numbers will be released on Wednesday.

The Wholesale Price Index (WPI) inflation is due on Friday and the country’s trade data is also due for release this week.

Though the rupee weakened slightly on Monday, the near-term view remains positive for the currency. The region between 64.70 and 64.80 will be a good near-term support for the currency.

As long as it trades above this support, the rupee can strengthen towards 64 in the coming days. But the strength going forward could be limited as the currency is heading towards a key medium-term resistance zone. The region between 63.95 and 63.85 is a strong resistance zone for the rupee.

The 200-week moving average and a trend-line resistance are poised in this region which makes it strong and also less likely for the rupee to breach this hurdle.

As such, a strong downward reversal from this 63.95-63.85 resistance zone may have the potential to drag the rupee lower to 65 or 65.20 in the short term.

The level of 65.45 is a crucial support for the rupee. A strong break below it may see the rupee weakening to 66.10 or even lower levels thereafter. It will also decrease the possibility of the rupee regaining strength thereafter.