Rupee: Go long above 75.6

The rupee (INR) has opened the session marginally higher at 75.7 compared to Thursday’s close of 75.76 against the dollar (USD). But it continues to stay within the range 75.6 and 76.

If the rupee gains further and breaks out of the resistance at 75.6, the exchange rate is likely to move to 75.4. Above that level, the resistance is at 75.15. On the other hand, if the domestic currency weakens and breaches the support at 76, it might result in a considerable sell-off. The support below 76 is at 76.3.

Yesterday, the Indian currency closed flat even as the Foreign Portfolio Investors (FPI) bought domestic assets considerably. The net inflow of FPIs on Thursday stood at ₹2,354 crore (equity and debt combined).

Dollar index:

The dollar index broke below the lower boundary of the range (between 98.8 and 101) and closed yesterday’s session at 98.48. This has opened the door for further decline in the index, possibly dragging it to 97.75; subsequent support is at 97.15. A weak dollar index could mean that the rupee might appreciate.

Trade strategy:

The rupee, currently trading at 75.65, is hovering around the critical hurdle if 75.6. Though the Indian unit displays bullish bias and the dollar index shows a weakness in the greenback, the rupee should breakout of 75.6 to establish a strong rally. So, traders can go long in rupee with tight stop-loss if it breaks out of that level.

Supports: 76 and 76.3

Resistances: 75.6 and 75.4