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The rupee (INR), which rallied to mark an intraday high of 73.74 on Thursday, gave up the gains and ended the session almost on a flat note at 73.88. On Wednesday, it had closed at 73.91. Nevertheless, the local currency has closed above the key barrier of 74, opening the door for further strengthening.
Following this, INR opened with a gap-up at 73.78 today, thereby crossing over the resistance of 73.85. Further appreciation from the current level can take the rupee to 73.7 – a resistance level. Above that level, it can advance to 73.5. But if the domestic currency weakens, it can find support at 74. Support below that level can be spotted at 74.3.
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As the market was bullish yesterday, Foreign Portfolio Investors (FPI) bought significant amount of domestic assets. Net investments were registered at ₹2,027 crore (equity and debt combined). Thus, the net inflow for the week has increased to about ₹11,350 crore. Strong inflows helped the rupee gain ground against the dollar.
Dollar index
The dollar index ended flat on Thursday as 92. But today it has been moving down since morning, and is currently hovering around 91.9. The price action indicates a bearish bias and, thus, the index will most likely decline towards 91.75. Subsequently, it could drop to 91.5.
Trade strategy
The rupee looks positive as it has closed above the key barrier of 74. Supporting the rupee bulls, the dollar index hints at weak dollar. Considering these factors, traders can go long in INR with stop-loss at 74.
Supports: 73.85 and 74
Resistances: 73.7 and 73.5
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