Breaking below the range of 73.00 and 73.15, the rupee (INR) closed at 73.18 against the dollar (USD) on Tuesday. This is a likely indication that the domestic currency might witness a correction from the current levels.

Today, INR opened flat at 73.17 and is hovering at the important level of 73.15. Since it closed below this level in the last session, it could depreciate towards the support of 73.25. Subsequent support is at 73.40. But if the INR rallies past 73.15, it can face a significant hurdle at 73.00. A breakout of this level can lift the local currency to 72.75.

Foreign portfolio investors (FPI) remained buyers on Tuesday, while net investments stood at ₹986 crore (equity and debt combined). Thus, net inflows in the first two trading sessions of the week are up at about ₹2,830 crore. So long as the inflow continues, the rupee will stand to gain against the greenback.

Dollar index

After rallying in the second half of Monday, the dollar index seems to have faced selling pressure as it closed with a loss on Tuesday. That is, it ended the session at 89.44 versus its previous close of 89.87. Even today, the index seems to be inclined to a decline as it made a fresh low of 89.36 early in today’s session. Moreover, the overall trend is bearish. So, the likelihood of a decline looks high, which can be good for the Indian currency.

Trade strategy

Though the rupee closed below the support of 73.15 in the last session, the dollar index looks weak. Thus, the likelihood of INR declining looks low. So, traders can be cautiously bullish on INR and go long with tight stop-loss for intraday.

Supports: 73.25 and 73.40

Resistances: 73.00 and 72.75

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