The rupee (INR) witnessed a volatile session on Wednesday, influenced by the developments in the US and it closed at 74.74, a loss of 0.5 per cent. However, today, the domestic currency has opened with a significant gap-up at 74.32 as the dollar declined overnight.

So, INR is currently trading above the support of 74.4 and if the positive momentum sustains, it can appreciate to 74.2 and then possibly to 74 – a key level. But if the rally does not sustain and if the rupee backtracks, 74.4 can provide a support. A breach of this level can pull the exchange rate to 74.6.

There was not much activity from Foreign Portfolio Investors (FPI) yesterday even as the market ended considerably higher. The net inflow stood at a meagre Rs 146 crore. Going ahead, if the FPIs continue their recent trend of buying domestic assets, it can increase the demand for the rupee.

Dollar index

The dollar index, that gained sharply during the earlier half of the session, erased most of its gains in the second half. That is, after registering a high of 94.3, it closed at 93.4. The index has opened flat today and is hovering at 93.4 where both the 21- and 50-day moving averages coincide. If it declines from the current level, 93 could be the immediate support, whereas 94 would be a key barrier on the upside.

Trade strategy

The rupee opened on the front foot and is currently trading above the support of 74.4. As long as it remains above that level, the domestic currency can trade with a bullish bias. Considering this, traders can initiate fresh longs in the rupee for intra-day with a tight stop-loss.

Supports: 74.4 and 74.6

Resistances: 74.2 and 74

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