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The rupee (INR) broke out of the critical resistance at 71.6 and closed at 71.49 against the dollar (USD) on Tuesday. Thus, there is a strong possibility of the rupee strengthening further.
On the upside, the Indian currency will face a hindrance at 71.4 above which the resistance is at 71.2. Since it has gone past the resistance at 71.6, it will now act as a solid support and as long as the rupee stays above that level, it can be approached with a bullish bias.
The dollar index is hovering around the resistance at 98.25 post the breakout of the key level of 98. The index is struggling to rise above 98.25 and it might face some selling pressure. A decline from current level will work in favour of the rupee.
Though there has been not much movement in the dollar, the one-year Non-Deliverable Forward (NDF) points of the USD-INR currency pair closed higher at 295.5 on Tuesday compared to 289.5 on Monday. This means that the dollar demand saw in uptick in forward market. Despite this, the Indian currency appreciated in yesterday’s session.
Today, the rupee has opened marginally higher at 71.44 versus yesterday’s close of 71.49. There is an immediate resistance at 71.4 and thus, before progressing further, the domestic currency might slightly decline on the back of the resistance. Hence, traders are recommended to initiate long on dips with stop-loss at 71.65.
Supports: 71.6 and 71.88
Resistances: 71.4 and 71.2
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