The rupee (INR), after opening lower at 71.44 on Wednesday versus its previous close of 71.38, gained through the day and ended the session at 71.22 against the dollar (USD). Thus, the exchange rate of USDINR remains with the range between 71.2 and 71.4. There was not much change in the one-year forward spread of USDINR as it was 304.8 points against previous day’s 304.3 points.

If rupee currency retains yesterday’s bullish bias and breaches the resistance at 71.2, it will face a hindrance at the important level of 71 and at 70.75 above it. But if the local currency weakens and breaks below the critical support at 71.4, it will find support at 71.6.

The dollar surged yesterday and as a result the dollar index rallied to make an intraday high of 97.1, after opening at 96.5. But the index gave up its entire gain and ended the session at 96.44 compared to its previous close of 96.38. Currently trading at 96.44, the index might decline towards the support at 96. Subsequent support is at 95.15. But in case the trend reverses, it will find resistance at 96.7 and 97.2 on the upside.

Trade strategy:

Since 71.4 is a strong support, rupee has a good chance to appreciate. But it is capped by the resistance at 71.2. Hence, from trading perspective, one can buy rupee if it breaks out of the resistance at 71.2 and place stop loss at 71.4.

Supports : 71.4 and 71.6

Resistances : 71.2 and 71

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