Daily Rupee call: INR bullish despite gap-down open

The rupee (INR) saw a considerable gain of nearly 0.9 per cent on Wednesday as it ended at 72.72 versus preceding day’s close of 73.36 against the dollar (USD). After opening with a gap-up, the domestic currency rallied throughout the session and it has zoomed past the resistance at 73.00, opening the door for further strengthening.

Following this, INR has opened today lower at 73.03. Nevertheless, it is less likely that it can decisively fall below the support of 73.00. It has already gone above that level during the initial hour and is already trading at 72.80. So, the rally might be extended. The nearest resistance levels can be spotted at 72.70 and 72.55.

The equity market saw a solid gain yesterday and the foreign portfolio investors (FPIs) too were positive as they made net investments of ₹2,088 crore. That takes the net foreign inflows for the week to ₹4,436 crore. So, this remained as one of the major contributor to the rupee gain. If the inflows continue to come in, the demand for the Indian currency will remain steady resulting in more gains against the greenback.

Dollar index

The dollar index, after making a low of 91.06, where the 21-day moving average coincides, bounced off this level and ended the day with a gain. That is, it closed the session at 90.95 versus previous day’s close of 90.79. However, there is an immediate resistance at 91.00, which can act as a strong hindrance for the bulls. Looking at the price pattern of the index since the beginning of this week, it has largely been held within 90.60 and 91.00 and so, until either of these levels are breached, the next swing in price will remain uncertain.

Trade strategy

Though the rupee began with a gap-down open, it has shown a good recovery in the initial hour of trade. Since the bias is in favour of the rupee, it can be expected to appreciate from here. Moreover, the dollar index is trading near a strong hurdle. So, traders can be bullish on INR and go long for intraday with a stop-loss at 73.00.

Supports: 73.15 and 73.00

Resistances: 72.70 and 72.55