Depreciating on the back of a resistance, the rupee (INR) settled the last session at 73.66 versus its Wednesday's close of 73.56 against the dollar (USD). Thus, the exchange rate of USDINR remains within 73.50 and 73.70 and unless either of these level of breached, the next leg of trend cannot be confirmed.
Opening flat at 73.66, the domestic currency has a support at 73.70. If this level is breached, it can decline to 73.85. Support below this level is seen at 74 – a crucial base. But if INR breaks out of 73.50, the nearest resistance is at 73.40. A breach of this level can lift the local currency to 73.15.
Despite the market facing downward pressure yesterday, the foreign portfolio investors (FPI) were positive. The net investments of FPIs stood at ₹2,260 crore (equity and debt combined) and as a result, the net inflow for the week has gone above ₹12,500 crore. This has been a major support for the Indian currency recently and until the foreign flows continues to come in, INR can have an upper hand over USD.
Dollar index
The dollar index fell last session and closed the session at 90.82 versus Wednesday's close of 91.09. So, it has fallen back below the 91 and even today, the index is trading with a negative bias as it is down to 90.65. The immediate support can be spotted at 90.50 and a break below this level can intensify the sell-off where the index can drop to 90. A fall in dollar index indicates weakness in the dollar and it can be positive for the rupee.
Trade strategy
The rupee has opened today’s session on a flat note at 73.66 and looks sluggish. Thus, it continues to stay within the range 73.50 and 73.70. Until the Indian currency trades within these levels, traders can follow range trading strategy.
Supports: 73.70 and 73.85
Resistances: 73.50 and 73.40