The rupee (INR) closed last session with a marginal gain against the dollar (USD). It closed at 74.14 after marking an intraday high of 73.82. That is, the local currency has essentially closed below the support of 74.
Today, INR has opened higher at 74.06 compared to yesterday’s close of 74.14. While the local currency faces a resistance at 74, a breakout of this level can lift the rupee to the subsequent resistance at 73.85. Above that level, it can potential appreciate to 73.7. But if the rupee depreciates on the back of the resistance of 74, it is likely to slip to 74.2. Below that level, it can find support at 74.3.
Foreign flows continues to come in as Foreign Portfolio Investors (FPI) remain bullish on the domestic market. The net investments by them on Monday stood at ₹4,548 crore (equity and debt combined). Consistent inflows can help the rupee advance.
Dollar index
The dollar index, after registering an intraday low of 92.13 on last session, recovered and closed with a gain at 92.72. However, the overall trend remains negative and it is likely to face a hurdle at 93 if it advances. But today, the index seems to be trading with a downward bias and has slipped to the current level of 92.6. If bears gain traction, it is likely to test the support of 92. Subsequent support is at 91.75 – its two-year low. A breach of this level can intensify the sell-off.
Trade strategy
The rupee has opened today’s session on a positive note and corroborating the same, the dollar index looks weak hinting at the possibility of a decline from the current level. However, INR faces a resistance at 74. Thus, traders can wait for now and go long in INR with a tight stop-loss if it breaks above 74.
Supports: 74.2 and 74.3
Resistances: 74 and 73.85