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On Monday, the rupee (INR) ended on a flat note at 72.95 versus the preceding session’s close of 72.97 versus the dollar (USD). Thus, the local currency has ended above the key level of 73.00 for two straight sessions. This is a positive sign, and it means that INR could gain further in the forthcoming sessions.
Today, the domestic currency, after opening flat, has moved up and is currently trading at 72.86. The nearest resistance from the current level is at 72.75. A breakout of this level can lift the local currency to 72.50. But in case it weakens, 73.00 can be a substantial support. Subsequent support levels are at 73.15 and 73.25.
As the market was under pressure on Monday, the foreign flows remained negative. That is, the net outflow by foreign portfolio investors (FPI) stood at ₹765 crore (equity and debt combined). Despite this, the rupee was steady on that day; however, if there are more outflows, it is likely to weigh on the Indian currency.
Dollar index
On Tuesday, the dollar index gave up the gains it made on Monday. Nevertheless, it managed to close above the 21-day moving average at 90.15 and the important support at 90.00. So, even though the major trend is bearish, the price area between 90.00 and 90.15 can act as a good support band, possibly arresting the decline.
Also, the price action over the past month shows that the index has largely been flat, oscillating in the band between 90.00 and 91.00. Unless either of these levels are breached decisively, the next leg of trend will remain uncertain.
Trade strategy
The rupee, which has managed to stay above the key support of 73.00, has inched up today and is currently trading at 72.86. The price action shows the bullish inclination of the rupee and one can be positive as long as it stays above 73.00. So, traders can buy INR with a stop-loss at 73.05 for intra-day.
Supports: 73.00 and 73.15
Resistances: 72.75 and 72.50
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