Technical Analysis

Rupee may witness minor correction

Akhil Nallamuthu, BL Research Bureau | Updated on June 03, 2020 Published on June 03, 2020

The rupee (INR) has opened the session with a considerable gain against the dollar (USD). It has begun the session at 75.03 compared to yesterday’s closing price of 75.35. On the back of the resistance of 75, the local currency has slightly moderated and is now trading around 75.15.

If the domestic currency extends the rally and breaches the hurdle at 75, it will face resistance at 74.8 and 74.5. But if it weakens on the back of the resistance at 75, the nearest support levels are at 75.4 and 75.6.

On Tuesday, the Foreign Portfolio Investors (FPI) bought local assets for significant amount following considerable buying on Monday. The net inflow of FPIs yesterday was nearly ₹7,500 crore (equity and debt combined). If this trend continues, the local currency can appreciate further.

Dollar index:

The dollar index breached the support of 97.75 yesterday, opening the door for further decline. Currently trading at 97.4, the index can find support at 97.15. A break below that level can drag the index to 95.75. A weakening dollar can be positive for the Indian currency.

Trade strategy:

The rupee, though trading with a bullish bias, is facing a crucial hurdle of 75. Also, the local currency might witness a pullback having rallied for the past few trading sessions. Considering these factors, traders can either buy rupee with tight stop-loss if it breaks out of 75 or buy rupee with tight stop-loss if the exchange rate moves to 75.4.

Supports: 75.4 and 75.6

Resistances: 75 and 74.8

Published on June 03, 2020
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