The rupee (INR) witnessed considerable volatility yesterday. It opened the session higher against the dollar (USD) and rose in the first half of the session; however, it declined in the second half. But still, the Indian currency had gained on close-to-close basis as it ended the session at 71.27 against its prior close of 71.36.

As it closed at 71.27, the exchange rate of USDINR remains within the range between 71.2 and 71.6. But the momentum, as hinted by the price action, is in favour of the local currency. If rupee breaks out of the resistance at 71.2, it will most likely appreciate to 71 – an important level. On the other hand, if rupee has a minor support at 71.4 with subsequent support at 71.6.

Dollar index:

The dollar index marginally gained yesterday as it ended the session at 97.93 versus its previous close of 97.81. Though the index has inched above the key level of 98, it has not moved past decisively. On the upside, 98.15 can be the nearest hurdle, above which the resistance is at 98.45. On the downside, the nearest support is at 97.5, below which there is a support band between 97 and 97.15.

Trade strategy:

One need to be cautious as the rupee faces a resistance at 71.2 and it should break that level for further appreciation. Hence, from trading perspective, it is recommended to initiate fresh rupee longs only if the local currency rallies past 71.2. In such case, 71.4 can be the stop-loss.

Supports: 71.4 and 71.6

Resistances: 71.2 and 71

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