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The rupee (INR) faced substantial selling pressure against the dollar (USD) on Friday because of the geopolitical tensions in the middle east. The prospect of crude oil price shooting up weighed on the Indian currency. On Friday, the rupee opened much lower at 71.61 versus its previous close of 71.37 and it continued to decline throughout the session, closing at 71.8.
If the downward pressure sustains and if it breaks below the support band between 71.88 and 72, the local currency may depreciate to 72.25. On the other hand, if rupee gains from current level, it will face a hurdle at 71.6, beyond which the resistance is at 71.4
Taking a broader view, one can observe in the chart that, since September, the rupee has been treading within the range between 70.5 and 72.25.
Though there was a temporary demand for the dollar, the dollar index could not gain beyond 97. If the index gains traction today, it could rise towards the resistance at 97.2; resistance above that level is at 97.75. On the downside, the supports are at 96.7 and 96.
Trade strategy:
As the Indian currency has inched below the key support at 72, it can be approached with a bearish bias. Hence, traders can initiate fresh rupee short positions on rallies with stop-loss at 71.75
Supports: 72.25 and 72.4
Resistances: 71.6 and 71.4
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