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The rupee (INR) came under selling pressure against the dollar (USD) on Thursday. The local currency faced a resistance at 70.7 and declined throughout the day, closing at 70.93. On the downside, 71 is a key support and notably, the USDINR exchange rate has been consolidating between 70.7 and 71.
If the local currency breaks below the support at 71, it may move lower to 71.2. On the other hand, if it breaks out of the resistance at 70.7, it can move to 70.5.
Dollar index
The dollar index has inched up, taking support at 97, and is currently trading at 97.35. A further appreciation will see it face resistance at 97.5, where a 50-day moving average coincides. If the index manages to breach that level, the next immediate resistance would be at 97.75. Alternatively, if the index moderates and breaks below 97.2, the nearest support is at 97.
Trade strategy
The rupee opened at 70.99 against its prior close of 70.93. Since 71 is a strong support and the exchange rate has been fluctuating between 70.7 and 71 recently, the local currency may gain intraday. It is, therefore, recommended that traders initiate fresh rupee longs. Maintain a tight stop-loss, as a break below 71 can instill more downward pressure.
Supports: 71 and 71.2
Resistances: 70.75 and 70.5
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