The rupee (INR) settled flat last session at 74.4 against the dollar (USD). Nevertheless, the local currency appreciated intra-day and registered a high of 74.25 before ending the session lower.
More than anything else, the results of the US election can have the biggest impact on the market and so the exchange rate of USDINR will face higher volatility today.
From today’s opening level of 74.8, the nearest support can be spotted at 75. Subsequent support is at 75.1. On the upside, the rupee can face hindrance at 74.6. Above that level 74.4 can be the resistance.
Foreign Portfolio Investors (FPI) continues to stay positive, in line with the recent trend. That is, they were buyers yesterday with a net inflow of considerable Rs 2,274 crore. This is positive for the Indian currency.
Dollar index
The dollar index that declined yesterday, has rebounded strongly today, taking support of the 21-day moving average at 93.4. It is currently hovering at the important level of 94. A solid break of this level can take the dollar index higher, possibly to 94.7 or even 95. But if the rally fails to sustain, it could fall back towards the support of 93.4. Subsequent support is at 93. Either way,the index could be highly volatile today because of the US election.
Trade strategy
The dollar has had the upper hand against most of the currencies since today morning and the rupee is no exception. The Indian currency has opened with a considerable gap-down and is currently trading around 74.7.
The price action is bearish and the likelihood of the rupee weakening further is high. But the currency pair could be more volatile than usual and so traders should tread with caution.
Supports: 74.8 and 75
Resistances: 74.6 and 74.4