Daily Rupee call: INR could extend gains

The rupee (INR) settled with a gain of 38 paise against the dollar (USD) as it ended the session at 73.66 on Tuesday. Thus, the local currency closed above the key barrier of 74 indicating a positive bias.

Today, the rupee opened with a gap-up at 73.44. A gain from here can take INR to 73.30 and subsequently to 73.15. Above this is an important level of 73. But if the domestic currency weakens from here, it can potentially find support at 73.50 and 73.70. Support below level can be spotted at 73.85. Notably, the rupee can trade with bullish bias until it stays above 74.

As the market rallied yesterday, the Foreign Portfolio Investors (FPI) bought significant amount of domestic assets. The net investments of FPIs on Tuesday was recorded at ₹3,242 crore (equity and debt combined). This helped the rupee advance versus the greenback.

Dollar index

The dollar index registered a loss of 0.6 per cent last session as it closed below the support of 92. Following this, it opened with a gap-down today and it marked a low of 91.14, which is also the lowest point in more than two years. This shows that the dollar index is witnessing strong downward momentum and it is likely to move down further. Currently hovering at 91.20, the nearest support is at 91. Subsequent support is at 90.50. A fall in dollar index shows weakness in dollar which can be supportive for the rupee.

Trade strategy

Following a positive close last session, the rupee opened with a gap-up today and it is currently hovers at 73.50. The price action of the currency pair USDINR hints at further strengthening of INR and moreover, the dollar index indicates a weak dollar. Hence, traders can initiate fresh rupee longs in intraday dips with a stop-loss at 73.70.

Supports: 73.70 and 73.85

Resistances: 73.30 and 73.15