The rupee, after briefly trading above the critical resistance of 70.75 against the dollar, is being sold at levels below it, a bearish indication. After closing at 70.68 yesterday, it opened lower at 70.77 and has been sliding since the open, unable to sustain above the resistance.

The domestic currency has minor support at 70.89, below which the immediate support is the important level of 71. On the other hand, if the rupee gains from the current level of 70.84, it will face hurdles at 70.75 and 70.5. The weakness in rupee can be primarily attributed to the strengthening dollar.

The dollar index has formed a higher peak in the daily time frame and has  closed above a key resistance of 97.67. It has also risen above the 21-day moving average, an indication of a short-term bull trend. Hence, the index will most likely appreciate towards 98, which could weigh on the Indian currency.

The US Energy Information Administration (EIA) will release inventory data later today. A higher than expected drop in the inventory level could push up crude prices further. Oil closed above its previous high yesterday. This will have a negative impact on the rupee, due to the country’s import dependence.

Considering the above factors, the domestic currency is expected to trade with a negative bias today and traders can short the rupee with a tight stop-loss.

Supports: 70.89 and 71

Resistances: 70.75 and 70.5

Related Topics
comment COMMENT NOW