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Yesterday, the rupee (INR) ended the session slightly higher at 71.31 versus 71.35 against the dollar (USD). The support at 71.4 seems to be limiting the downside for the rupee as it rebounded from that level yesterday. So, until it trades above that level, the local currency can be approached with a positive bias.
If rupee advances from current levels, it will face a hurdle at 71.2, above which there is a considerable resistance at 71. On the other hand, if it breaks below the support at 71.4, it will find support at 71.6.
The dollar index closed with a loss for second consecutive day, breaching the support at 97.2. The index is currently hovering around the support at 96.7. A break below this level could intensify the sell-off. Support below 96.7 is at 96. But if the index moves up on the back of the support, it will face resistance at 97.2.
Trade strategy:
As the dollar index is trading with a bearish bias and the rupee has a strong support at 71.4, one can approach the Indian currency with bullish bias. Traders are recommended to initiate rupee long positions on declines with stop loss at 71.45.
Supports: 71.4 and 71.6
Resistances: 71.2 and 71
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