The rupee (INR) witnessed a marginal gain in the past session as it ended at 72.96 versus Monday’s close of 73.02 versus the dollar (USD). The local currency is unable to take any direction and continues to move around the 73-mark. Also, the recent price action shows that it has been held in the band between 72.80 and 73.15 for over a week. But notably, the rupee is steady despite the dollar making some considerable gains in the past few trading sessions.

This could be due to strong foreign inflows into the domestic financial market. On Tuesday, the foreign portfolio investors (FPI) made net investments of ₹6,181 crore. With that, the first two sessions of the week has seen net FPI inflows amounting to nearly ₹7,700 crore. Such inflows can keep the domestic currency strong.

On the back of this, if INR gains from the current level, 72.80 will be a key resistance. A break out of this level can take it 72.70, above which the resistance is at 72.50. But if the dollar gains become so significant that the rupee weakens from here, it can find support at 73.15 and 73.25.

Dollar index

The dollar index invalidated the critical resistance at 91.00, which has turned the short term trend bullish. The breakout has also confirmed the inverted head and shoulders pattern, which also indicates a bullish trend reversal. So, the dollar index can be expected to rally from here towards 91.50 and 92.00. The short-trend trend will be biased to upside as long as the index trades above 90.50, where the 21- and 50-day moving averages coincide, making it a strong support.

Trade strategy

While strong inflows are helping the rupee remain steady, the dollar index is clearly indicating that the greenback has turned bullish. These factors can cancel out each other resulting in the exchange rate of USDINR remaining sideways. Hence, keeping in mind the key levels at 72.80 and 73.15, traders can execute range trading strategy.

Supports: 73.15 and 73.25

Resistances: 72.80 and 72.70

Related Topics
comment COMMENT NOW