Technical Analysis

Daily rupee call: Buy INR if it moderates to 74.9

Akhil Nallamuthu | Updated on August 14, 2020

The rupee (INR) opened flat today at 74.84 against the dollar (USD). The currency pair continues to be sluggish and is stuck within the range between 74.7 and 75. A decisive break out of either of these levels is needed for USDINR to start trending.

Resistance levels above 74.7 are at 74.5 and 74.35, whereas support levels below 75 are at 75.1 and 75.3.

Foreign Portfolio Investors (FPI) continue to pump in money and they remained net buyers yesterday – the net inflow was recorded at ₹416 crore (equity and debt combined). With that, the weekly net inflow has crossed over ₹2,000 crore – a positive indication for the Indian currency.

Inflation up

The Consumer Price Index (CPI) inflation for July was recorded at 6.93 per cent, a tad higher compared to revised estimate of June’s 6.23 per cent, according to data from the Ministry of Statistics and Program Implementation (MoSPI). This was mainly driven by food items.

The Consumer Food Price Index (CFPI) stood at 9.62 per cent in July, as against 8.72 per cent a month before. Higher inflation is not good for the currency and it has been above the Monetary Policy Committee’s targeted level for four straight months. Elevated inflation also dents the hope of a rate cut.

Dollar index

Weekly jobless claims in the US came down for third week in a row and notably it dropped below 1 million for the first time since the last week of March. But this was not enough to lift the dollar and as a result the dollar index was flat on Thursday. It continues to oscillate between 93.5 and 94 and the consolidation phase is likely to be extended.

Trade strategy

The rupee, currently trading at 74.8, is now in the middle of the range. Since the Indian currency has a positive bias and the dollar is weak, traders can initiate fresh rupee longs with a tight stop-loss if it moderates to 74.9.

Supports: 74.9 and 75

Resistances: 74.7 and 74.5

Published on August 14, 2020

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