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The rupee (INR) closed with a gain on Tuesday as it ended the session 71.83 versus its previous close of 71.94 against the dollar (USD). However, the intraday price action hints weakness in the Indian currency. The one-year forward spread for the USDINR has marginally increased to 304 points from 302 points.
The support band between 71.88 and 72 stays valid and further appreciation from current levels can take rupee to the resistance at 71.6; above that level, the resistance is at 71.4. But if the local currency weakens and breaks below 72, it can decline to 72.25.
Dollar index:
The dollar index continues to oscillate within the range of 96.4 and 97.1. Until the index remains below 97.1, the chance of recovery is slim. Above 97.1, the resistance is at 97.75 whereas below 96.4, the support is at 96.
Trade strategy:
Rupee has opened on a back foot in today’s session at 72.02 versus its previous close of 71.83. But unless it decisively breaks below 72, the possibility of rupee gaining from current levels cannot be rejected. Traders with high risk-appetite can make use of this decline to buy rupee and place fixed stop-loss at 72.3.
Supports: 72 and 72.25
Resistances: 71.6 and 71.4
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