Following a flat close on Tuesday, the rupee (INR) has opened slighter lower today at 74.17 against the dollar (USD). If bears gain momentum and pull down rupee below the support band of 74.2 and 74.3, it will most likely depreciate to 74.5. Below this level, support lies at 74.7. But if the local currency regains traction and moves up, 74 can be a key barrier for the bulls. A break out of this level can intensify the rally. Resistance levels above 74 can be spotted at 73.85 and 73.7.

Since the market remain bullish, the Foreign Portfolio Investors (FPI) have been buying significant amount of domestic assets. On Tuesday, the net investment by FPIs stood at ₹5,627 crore (equity and debt combined), taking the net inflow for the week to ₹10,175 crore. As the market at broader level looks bullish, more inflows can be expected during the upcoming trading sessions and this can help the rupee gain ground against the dollar.

Dollar index

The dollar index was sluggish last session and as a result it closed the session on a flat note. Nevertheless, the price action indicates a negative bias and it lies below both 21- and 50-day moving averages. So, the index might weaken from here and trading at 92.7, the nearest support levels are at 92.2 and 92. A decline in the dollar index denotes a weak dollar which can be conducive for the Indian currency.

Trade strategy

The rupee, after opening the session at 74.17, has inched down to 74.25. Thereby, the domestic currency is currently trading in the range between 74.2 and 74.3. Also, today’s open of 74.17 can act as a minor resistance. Given these factors, traders can stay on the sidelines until either 74.17 or 74.3 is breached. Initiate fresh positions with stop-loss in the direction of the break.

Supports: 74.3 and 74.5

Resistances: 74.17 and 74

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