As rupee faced a significant resistance at 73.50, it was not able to move above that level last session, against the dollar (USD). Nevertheless, the domestic unit did not lose and ended the session almost on a flat note at 73.56.
However, the rupee has opened with gap-down today at 73.70 – a support level. Below this level, it can depreciate to 73.85 with subsequent support at 74. But if the Indian currency bounces on the back of the support at 73.70, there is a strong resistance at 73.50. Resistances above this level can be seen at 73.40 and 73.15.
The Indian market continues to rise on Wednesday, the indices marked fresh lifetime highs and as a result, the foreign portfolio investors (FPI) too were bullish and continued to buy. The net investments on Wednesday stood at ₹3,564 crore (equity and debt combined), taking the weekly net inflow of FPIs to about ₹10,260 crore. The foreign inflows contributes significantly to rupee’s strength and as long as this stays strong, INR is likely to make further progress.
Dollar index
The dollar index ended Wednesday’s session with a marginal gain as it closed at 91.09 versus its previous close of 90.96. However, there is no strong upward momentum and the trend in chart continue to remain bearish. Today, the index opened flat and is hovering around 91. But chart shows lack of trend and 90.50 or 91.25 is breached, the direction of the upcoming trend will remain uncertain.
Trade strategy
Even as rupee opened on the weak foot today, it has a support at 73.70. At the other end, INR faces a resistance at 73.50. Hence, the next leg of trend will remain unclear until it treads within 73.50 and 73.70. So, traders can adopt range trading strategy until it moves out of the range.
Supports: 73.70 and 73.85
Resistances: 73.50 and 73.40