Technical Analysis

Rupee might strengthen

Akhil Nallamuthu | | Updated on: Jun 02, 2020
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The rupee (INR), after closing above the key resistance of 75.6 yesterday, has opened today almost unchanged at 75.56 against the dollar (USD). The local currency closed at 75.54 on Monday, after registering an intraday high of 75.29. Since the rupee has breached the resistance at 75.6, it is likely to remain bullish.

If the domestic unit strengthens from the current levels, it will face a hindrance at 75.3. Above that level, the resistance can be spotted at 75.15. But if the rupee weakens, 75.6 will act as a considerable support. A break below this level can drag the exchange rate to 75.8.

The Foreign Portfolio Investors (FPI) began the month with net buying of domestic assets. Yesterday, the FPIs marked a net inflow of about ₹1,575 crore (equity and debt combined) aiding the rupee to stay afloat. If the FPIs carry over the buying trend, the Indian currency will be able to post more gains.

Dollar index:

The dollar index extended its downtrend where it closed in the red yesterday. Today, it made an intraday low of 97.75, which is a good support, and is now hovering around yesterday’s closing price of 97.86. If it falls below 97.75, it will descend towards the next support at 97.15. A fall in dollar index might prove positive for the Indian currency.

Trade strategy:

The rupee could sustain above 75.6 so far in today’s session and until it trades above that level, the likelihood of a rally is high. So, traders can go long in rupee with a tight stop-loss for intraday.

Supports: 75.6 and 75.8

Resistances: 75.3 and 75.15

Published on June 02, 2020

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