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BL Research Bureau
On facing significant downward pressure, the rupee (INR) declined on Tuesday against the dollar (USD). It closed at 71.56 versus 71.29 – its previous close. Thus, the local currency has breached important support at 71.5, opening the door for further weakness. This is despite a fall in the one-year forward spread of USDINR.
The Indian currency has its nearest support at 71.65, and if that level is breached, it can potentially drift to 71.88. The price band between 71.88 and 72 can act as a considerable support band. On the other hand, if rupee recovers, 71.5 will serve as a hindrance. Above that level, 71.4 can act as support.
Dollar index
The dollar demand seems to be increasing, and on the back of it, the dollar index is heading north firmly. Yesterday it registered a fresh 52-week high of 99.72. If the index advances further, it could rise to the psychological level of 100. On the other hand, if it faces a correction, 98.7 and 98.5 will act as supports.
Trade strategy
Today, the rupee has opened much lower at 71.79 versus its previous close of 71.56. The selling pressure on Indian currency is evident, and it will most likely decline further. Traders can make use of intraday rallies to initiate fresh rupee shorts. Place stop-loss at 71.6.
Supports : 71.88 and 72
Resistances: 71.65 and 71.5
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