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On Wednesday, the rupee after testing the crucial level of hurdle of 71 closed marginally weaker at 70.89 versus the previous close of 70.84 against the dollar. Thus, it continues to stay within the range between 70.75 and 71.
The US Fed has cut the policy rate by 25 bps, in line with the market expectations and indicated a pause. Dollar weakened and risk-on rally followed. The dollar index has broken below the support at 97.35 and is expected to test the key level of 97. Below that level, the index could depreciate to 96.4 and such a decline will lift the emerging market currencies including the rupee.
According to NSE data, FPIs pumped in ₹7,192 crore on Wednesday lifting the positive market sentiment. Also, brent crude moved below the support of $61 yesterday and weakness is expected to continue which will provide further relief for the domestic currency.
Considering the above factors, along with the fact that 71 is a strong support, one can take bullish position in the rupee. Traders are recommended to initiate rupee longs in dips with potential intraday targets of 70.75 and 70.5 with stop-loss at 71.
Supports: 71 and 71.2
Resistances: 70.75 and 70.5
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