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Breaking out of the range, the rupee (INR) closed at 73.32 on Tuesday, above the resistance of 73.50 against the dollar (USD). This opened the door for further strengthening. On the upside, the nearest hurdle is seen at 73.15, a breach of which can lift the local currency to 73. But in case of it weakens, it can find a support band between 73.40 and 73.50. Subsequent support can be spotted at 73.70.
The foreign portfolio investors (FPI) continue to be positive on the Indian market. The net FPI inflows yesterday stood at ₹2,350 crore (equity and debt combined).This trend is likely to continue and this can aid the rupee gain ground against the dollar.
Dollar index
The dollar index, which closed with a loss in last session, seems to have carried over the negative sentiment in today’s session as well. That is, against previous close of 89.99, it is current trading at 89.73 – its lowest point in two and a half years. Further depreciation can drag the index towards 89.50, which can act as a support. Subsequent support can be seen at 89. A declining dollar index means a weak dollar, which can be positive for the Indian currency.
Trade strategy
The rupee opened with a gap-down at 73.34 versus last session close of 73.42. Since INR has broken out of the consolidation range, the likelihood of a rally from here is high. Hence, traders can go long in rupee on with stop-loss at 73.45.
Supports: 73.40 and 73.50
Resistances: 73.15 and 73.00
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