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Yesterday, the rupee (INR) gained as it closed at 71.33 versus its previous close of 71.44 against the dollar (USD). Thus, it has gone back above the important level of 71.4. Notably, the one-year forward spread continues to stay around 300 points.
Further appreciation will face a hurdle at 71.2. A break of that level can take the exchange rate of USDINR to 71. On the other hand, if the local currency depreciates, 71.4 will act as a support. The 50 per cent Fibonacci retracement level coincides at that level. If it slips below 71.4, it can decline to 71.6.
Dollar index:
The dollar index, after inching above the critical level of 98, declined and closed at 97.97, yesterday. But it continues to trade around that level and is showing bullish bias. If it manages to breakout, the immediate resistance will be at 98.45. But if it declines, 97.7 will act as a good support.
Trade strategy:
Though the rupee gained yesterday, the recent trend is bearish. Also, the dollar index is likely to breakout of a key resistance, which will weigh on the Indian currency. Hence, one can take bearish view until the rupee trades below 71.2. Traders can sell rupee for intraday with stop-loss at 71.
Supports: 71.4 and 71.6
Resistances: 71.24 and 71
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