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The rupee (INR), after closing below the support of 75.6 to the dollar (USD) on Monday, , opened lower today. The Indian currency began the session at 75.88, versus yesterday’s close of 75.73.
While 76 can provide a cushion, a break below that level can drag the exchange rate to 76.3. Subsequent support for the rupee is spotted at 76.5. But if the rupee takes support at 76 and appreciates, the notable resistances are at 75.8 and 75.6.
The domestic unit lost one-fourth of a per cent yesterday, ending the session at 75.73, after making an intra-day low of 75.77. This is despite buying by Foreign Portfolio Investments (FPI); the net inflow yesterday was nearly Rs 535 crore (equity and debt combined). That said, a break below 76 can intensify a sell-off.
Dollar index
Though the dollar index gained marginally yesterday, it is hovering around the important level of 100, and the price action does not indicate a definite trend. The daily chart shows that the index remains within 98.8 or 100.9.
Trade strategy
Though the rupee is displaying a bearish bias, the price level of 76 is an important support, which can possibly limit the downside. So, on the back of the support, traders can go long in rupee for intra-day. Go for a tight stop-loss, as a break below 76 might result in a considerable fall.
Supports: 76 and 76.3
Resistances: 75.8 and 75.6
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