Technical Analysis

Daily Rupee call: Tread with caution

Akhil Nallamuthu BL Research Bureau | Updated on May 22, 2020 Published on May 22, 2020

The rupee (INR), reacting to the resistance at 75.6, has opened today’s session lower at 75.73 versus Thursday’s close of 75.61. If the local currency depreciates further, it can find support at 75.8 and 76. On the contrary, if it regains traction and breaks out of 75.6, it can rally towards the resistance at 75.4. Subsequent resistance is at 75.15.

The Foreign Portfolio Investments (FPI) were slightly bearish yesterday as they sold net assets worth ₹258 crore (equity and debt combined). However, the Indian currency gained a little over 0.2 per cent yesterday, ending the session at 75.6. But it stopped short of closing above the critical resistance of 75.6.

Today, the Reserve Bank of India has announced a cut in the repo rate by 40 bps, bringing it down to 4 per cent. Initial reaction from the rupee has been a slight fall. However, it cannot be taken as a confirmation for further depreciation. Going ahead, there can be higher volatility throughout the day.

Dollar index:

The dollar index took support at 99 and closed with a gain yesterday, after posting loss in the preceding three trading sessions. Currently trading at 99.5, the index remains within the range of 98.8 and 101 and it is expected to be sluggish until either of these levels are broken.

Trade strategy:

The rupee, trading between two key levels of 75.6 and 76, can be volatile today on the back of the repo rate decision by the RBI. Hence, traders should tread with caution.

Supports: 75.8 and 76

Resistances: 75.6 and 75.4

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Published on May 22, 2020
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