Extending gains, the rupee (INR) began the session with a gap-up open at 75.16, compared to Wednesday’s close of 75.67 against the dollar (USD). It then firmed up and is currently hovering around the important level of 75. Beyond 75, the rupee might face hindrance at 74.8 and 74.5.

The Indian currency gained about 0.7 per cent yesterday against the greenback. After marking an intra-day high of 75.59, it closed the day at 75.67. Since it closed above the critical76 level, the local currency can be expected to trade with a bullish bias, at least in the near-term.

A major factor for the appreciation in the rupee was that Foreign Portfolio Investments (FPI) were net buyers on Wednesday. Net FPI inflows were ₹722 crore (equity and debt combined), and the overall market sentiment was positive yesterday. If this trend continues, the rupee can advance further.

Dollar index

The dollar index continued to decline yesterday, and it is approaching the 50-day moving average at 99.3. But in the daily chart, the price action since the beginning of the month shows that the index has been moving in a sideways trend. It is oscillating between 98.8 and 100.9. While the index stays within these levels, the next price swing will be uncertain.

Trade strategy

The Indian currency seems to be building a strong upward momentum, and is attempting to breach an important level at 75 in pursuit of further gains. The rupee is likely to break out of this level, which can intensify the rally. Hence, traders can initiate rupee longs with stop-loss at 75.2

Supports: 75.16 and 75.6

Resistances: 74.8 and 74.5

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