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The rupee (INR) lost about one-third of a per cent last session as it closed at 73.28 versus Friday’s close of 73.06 against the dollar (USD). The local currency begun Monday’s session with a gap-down and was unable to recover intraday. Also, it closed below the support of 73.25, a bearish indication.
Following this, INR opened with gap-up today at 73.17, thereby going back above the support of 73.25. But unless, it rallies past the resistance of 73.15, the recovery can be shaky and the domestic unit could witness fresh selling. If it weakens and breaks below the support at 73.25, it can possibly drop towards the support band of 73.40 and 73.50. Subsequent support is at 73.65. Alternatively, if it breaks out 73.15, INR can remain bullish today, with the nearest resistance at 73.00.
Also read: Rupee weak below 73.25
Despite the market facing significant selling pressure on Monday, the foreign portfolio investors (FPI) remained buyers. The net FPI investments on last session stood at ₹650 crore (equity and debt combined). This could have provided good support for the INR yesterday. As long as the foreign inflows continue to come in, the rupee can be steady against the greenback.
Dollar index
The dollar index which has been recovering over the past few days, closed flat on Monday after facing the resistance at 91.00. The 50-day moving average too lies at this level, making it a strong hurdle for the dollar bulls. Today, the index has been flat since open. If 91.00 is breached, the short-term outlook for the dollar can turn bullish. Immediate resistance levels are at 91.20 and 91.50. In this case, rupee can face downward pressure.
Trade strategy
Even as the rupee has opened with a gap-up, last session's weakness can be carried over today and to a large extent it depends on how it reacts to resistance at 73.15. Currently trading at 73.17, a break below 73.25 can invite more bears. Hence, traders can sell INR with a stop-loss at 73.15 if it falls below the support at 73.25.
Supports: 73.25 and 73.40
Resistances: 73.15 and 73.00
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