The rupee (INR), which closed with a gain of half a per cent in the last session, opened on the front foot at 73.98 against the dollar (USD) today. It had closed at 74.38 on Thursday.

Trading at around 74, if the local currency progresses from here, 73.85 can be a hurdle. A breakout of this level can take it to 73.7 – the next resistance level. Subsequent resistance is at 73.5. But if the rupee weakens from the current level, 74.25 can act as a support. Below this level, support can be spotted at 74.5.

Following the easing in market sentiment, Foreign Portfolio Investors (FPI) pumped in a significant amount of money in the domestic market. The net investments on Thursday stood at a substantial Rs 5,368 crore (equity and debt combined). This trend is likely to continue and, consequently, the rupee could strengthen against the dollar.

Dollar index

The dollar index dipped considerably in the last session as risk-on sentiment prevailed across all financial markets. It lost nearly one per cent as it closed at 92.5 versus the previous day’s close of 93.4. The price has slipped below the 21- and 50-day moving averages, indicating a bearish outlook. Currently hovering at 92.5, the index has a support band between 92.2 and 92. Subsequent support is at 91.7.

Trade strategy

Following the gap-up open, the rupee has shown a positive bias and the likelihood of a rally is high. Corroborating the same, the dollar index hints at a possible depreciation in dollar. Considering these factors, traders can go long in INR, with a stop-loss at 74.25.

Supports: 74.25 and 74.5

Resistances: 73.85 and 73.7

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