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After opening flat at 72.94 against the dollar (USD) on Wednesday, the rupee (INR) rallied in the first half of the session. But after marking the day’s high at 72.78, the local currency depreciated and by the end of the session had given up almost all the intra-day gains and closed at 72.92.
Following this, the Indian currency has opened today’s session with a gap-down at 73.13 i.e., about 0.3 per cent lower compared to yesterday’s close. Thus, it has slipped below the 73.00-mark and is currently trading near the support of 73.15. A breach of this level can drag INR to 73.25. Support below this level is at 73.40. But if it gains, 73.00 can be a substantial resistance to break. Subsequent resistance levels are at 72.75 and 72.50.
On Wednesday, the market came under pressure and witnessed a considerable sell-off. Foreign portfolio investors (FPI) remained sellers and net outflow stood at a considerable ₹1,688 crore (equity and debt combined). This has taken the net outflow for the week to about ₹2,450 crore. Despite this, INR was holding steady. However, if the outflows continue, it could lose out to the downward pressure at some point.
Dollar index
The dollar index bounced off the support band of 90.00 and 90.15 to rally on Wednesday. It ended the day at 90.65, gaining about half a per cent for the day. Today, it has opened marginally higher and is currently trading at around 90.75. The nearest resistance it faces is at 91.00, a breakout of which can result in a sharp rally.
But the price action shows a sideways range of 90.00 and 91.00 and so, unless the index moves out of the range, nothing can be said with certainty. If it can carry over yesterday’s positive momentum and breach 91.00, it can weigh on the Indian currency.
Trade strategy
The rupee has opened today’s session on a weak note and it looks to be inclined to a downward move. After a gap-down open, it is hovering at 73.15. Since this is a support, traders can short INR below this level with a tight stop-loss.
Supports: 73.25 and 73.40
Resistances: 72.50 and 72.75
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