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The rupee (INR) weakened on Tuesday, extending its loss against the dollar (USD). After opening at 71.18 versus its previous close of 71.11, it ended yesterday’s session at 71.21. Notably, the domestic currency has a support at 71.2.
If the local currency breaks below 71.2 and continues to decline, it has a support at 71.4, where the 50 per cent Fibonacci retracement of the previous uptrend coincides. But if the rupee recovers on the back of support, it will face a hurdle at 71. If rupee breaches that level, it can rally to 70.7.
Dollar index
The dollar index softened yesterday, but it took support at 97.5 – the 50-day moving average – and has inched up to the current market price of 97.66. On further gains, it might rally towards the resistance band between 97.8 and 98. On the other hand, if the index declines, it may fall to the support at 97.2, the 21-day moving average.
Trade strategy
The rupee continues to exhibit weakness and remains below the key level of 71. Hence, one can approach the Indian currency with a bearish bias. Traders can short the rupee on rallies, with stop-loss at 70.9
Supports: 71.2 and 71.4
Resistances: 71 and 70.7
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