The rupee (INR) witnessed a flat session yesterday as the Reserve Bank of India (RBI) kept the repo rate unchanged at 5.15 per cent, which was on the expected lines. It closed at 71.19 versus its previous close of 71.21 against the dollar (USD).

The level of 71.1 has been acting as a resistance for the rupee since the beginning of the week and it has been struggling to break that level. This might result in the local currency facing downward pressure. On the other hand, 71.3 has been acting as a support for past few trading sessions. Thus, rupee seems to be consolidating between 71.1 and 71.3 and unless it breaches either of these levels, the next leg of trend cannot be confirmed.

Dollar index:

Extending the recent bull run, the dollar index closed with a gain yesterday – its fourth consecutive close in the green. It is currently retesting the resistance i.e. its previous high at 98.5 levels. If the index rallies past that level, the nearest hurdle is seen at 98.7, above which the resistance is at 99.15. On the downside, the nearest support is at 98. Subsequent support is at 97.5.

Trade strategy:

The rupee has opened lower in today’s session at 71.27 against its previous close of 71.19. Thus, it continues to stay within 71.1 and 71.3 and so from the perspective of trading, it is recommended to stay on the sidelines until the exchange rate breaks either of these levels.

If rupee breaks out of the resistance 71.1, one can buy rupee with a tight stop-loss; whereas, if rupee breaks below the support at 71.3, go short.

Supports: 71.3 and 71.6

Resistances: 71.1 and 71

comment COMMENT NOW