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The rupee (INR)yesterday settled marginally lowerat 73.65 versus its previous close of 73.52 against the dollar (USD). But INR managed to close above the support of 73.7 despite trading below it briefly. Today, INR began the session on the front foot by opening with a gap-up at 73.47. The nearest hindrance that the domestic currency will face is at 73.3. Subsequent resistance levels are at 73.15 and 73. But if the local currency gives up the gain and depreciates, 73.5 can be a support. Below that level, support levels are at 73.7 and 74.
The Foreign Portfolio Investors (FPI) were sellers yesterday as the market was a bit wobbly. The net outflow on Thursday stood at ₹250 crore (equity and debt combined). But for the week, the FPIs remain net buyers. On the other hand, more selling by them can weigh on the rupee.
Dollar index
The dollar index declined yesterday and closed lower at 92.9 against the previous close of 93.2. It continues to hover at the 21-day moving average and the price action indicates that the index can stay in a sideways trend for the day. While 94 is a substantial resistance on the upside, 92.7 is an important support from the short-term trend perspective. A break below this level can drag the index towards the support at 92.15 and 92. A fall in the dollar is positive for the Indian currency.
Trade strategy
The rupee, after beginning the session with gap-up, continued its rally and is now testing the resistance of 73.3. So, even though the bias is positive, traders can buy rupee with tight stop-loss if it breaks out of 73.3.
Supports: 73.5 and 73.7
Resistances: 73.3 and 73.15
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