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The rupee (INR), after closing with a marginal gain on Wednesday, opened with gap-down today against the dollar (USD). As it has slipped below the support of 73.7, the intraday outlook is bearish for the local currency. Support further downside can be spotted at 74, a break below which can intensify rupee sell-off. On the other hand, if INR strengthens and moves above 73.7, it is likely to face resistances at 73.5 and 73.3.
The Foreign Portfolio Investors (FPI) continued to be positive as they were net buyers yesterday. The net investments on Wednesday stood at about ₹265 crore (equity and debt combined), thus taking the weekly tally to ₹1,733 crore. Consistent inflow of foreign money can help rupee stay afloat against the greenback.
Dollar index
The dollar index, that closed flat yesterday, has been rallying today. Currently trading at around 93.5, it is testing the 50-day moving average resistance. A breakout of this level can take the index to 94 – a trend defining level i.e. above 94, the outlook can turn positive for the dollar index. Strengthening dollar can weigh on the local currency.
Trade strategy
The rupee has opened the session lower and it now remains below the support level of 73.7, it can now act as a key resistance level. Also, the dollar looks positive today as indicated by the dollar index. Hence, the likelihood of rupee weakening today is more. So, traders can sell rupee with a tight stop-loss.
Supports: 74 and 74.1
Resistances: 73.7 and 73.5
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