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The rupee (INR) firmed up against the dollar (USD) on Wednesday as it closed at 70.84 versus its previous close of 70.92, gaining one-tenth of a percent. The local currency tested the resistance at 70.75 as it registered an intra-day low of 70.74; but it could not break beyond that level.
Above 70.75, it will face a hurdle in the form of resistance band between 70.35 and 70.5. On the other hand, if the rupee softens from current levels, 71 will act as a substantial support. One can continue to hold bullish view on rupee until it trades above the key base at 71.
The dollar witnessed sell-off in Wednesday’s session. Thus, the dollar index declined sharply and broke below the support at 97.4. The index is currently hovering around the important level of 97. On further depreciation, it could fall towards the support band between 96.35 and 96.5. However, if the index takes support at 97 and rises, it will face resistance at 97.4.
Trade strategy:
In today’s session, the rupee has opened considerably higher at 70.68 against its previous close of 70.84. The momentum appears to be favouring the local currency as it has opened above the resistance at 70.75. Hence, traders can initiate fresh long positions in rupee on dips with 71.1 as stop-loss.
Supports: 70.75 and 71
Resistances: 70.5 and 70.35
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