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The rupee (INR) was sluggish yesterday as it was treading within a tight range against the dollar (USD). It closed the session marginally higher at 71.21 versus its previous close of 71.27. Thus, the broader range between 71.2 and 71.6 is still intact.
Though the Indian currency has not fallen post the rally from 71.6, it has been struggling to breach the resistance at 71.2. A prolonged consolidation at current level might attract selling pressure.
If rupee can break out of the resistance at 71.2, it will most likely appreciate to 71 – an important level. On the other hand, if the local currency weakens, it will find support at 71.4 with subsequent support at 71.6.
Dollar index:
The dollar index rallied and closed with a gain for third consecutive day. The index has moved above the critical level of 98, opening the dollar for further strengthening. This could weigh on rupee. On the upside, 98.45 can be the nearest hurdle, above which the resistance is at 98.7. On the downside, the nearest support is at 98. Subsequent support is at 97.5.
Trade strategy:
Rupee has been consolidating in a tight range. It continues to hover around the key level of 71.2. Traders are recommended to buy rupee only if it breaks out of 71.2 with 71.4 as stop-loss.
Supports: 71.4 and 71.6
Resistances: 71.2 and 71
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