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On Thursday, the rupee (INR) opened below the support at 71 against the dollar (USD) and marked a three-week low of 71.11, before closing at 70.96.
This means, the rupee has not breached the support on closing basis, but the price action clearly indicates weakness. The exchange rate of USDINR, by registering a five-week high and a three-week low in a span of one week, implies higher volatility and increasing chances of it moving out of the range between 70.75 and 71.
The rise in dollar on the back of trade deal optimism between the US and China is hurting the domestic currency. The dollar index appreciated yesterday, taking support at 97.67, and is trading around the resistance at 98. Further appreciation can take the index to 98.34, but a correction might see it retracing to 97.67.
The rupee has opened substantially lower today, at 71.26 versus yesterday’s close of 70.96. This is well below the critical level of 71, and hence further weakness is highly probable. So, traders can approach with a negative bias and short rupee on intra-day rallies, with stop-loss at 70.95.
Supports: 71.4 and 71.6
Resistances: 71 and 70.89
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