Unable to close the day above 73, the rupee closed at 73.02 on Monday, after briefly trading above 73 against the dollar (USD). This indicates that rupee buyers are approaching this level with caution.

Against this backdrop, the domestic currency opened today’s session with a considerable gap-down at 73.15. If the longs are to give up further at the current level, INR can possibly slip below the support of 73.15, with subsequent support at 73.40. But a successful attempt to take the rupee above 73 can take the USDINR exchange rate to 72.75, and then, probably, to 72.50.

On Monday, foreign portfolio investors (FPI) were bullish, pumping in about ₹1,843 crore (equity and debt). Despite this the local currency was unable to hold on to its intra-day gains .

Dollar index

The dollar index, which declined to hit a fresh low of 89.42 in the last session, recovered towards the end of the session to close at 89.87 versus Friday’s close of 89.94. Nevertheless, the overall trend is negative and the index has substantial resistance levels at 90 and 90.3 – its 21-day moving average, which can put a cap on gains.

Trade strategy

While the trend is bullish, the rupee has opened today’s session on the weak foot at 73.15 – a support. At the other end, 73 is a considerable resistance. This means, the rupee can stay within these levels for the day; traders should, therefore, tread with caution.

A break below 73.15 can drag the Indian currency to 73.40, whereas a breach above 73 can lift it to 72.75.

Supports: 73.15 and 73.40

Resistances: 73.00 and 72.75

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