MUMBAI, Jan 19 (Reuters) - The Indian rupee was largely flat on Friday, tracking rangebound movement in its Asian peers, with traders continuing to expect gains in the local currency over the near- to medium-term.
The rupee was at 83.1425 against the U.S. dollar as of 10:15 a.m. IST, compared with its close at 83.1225 in the previous session.
The dollar index was steady near 103.32 and the 10-year U.S. Treasury yield extended its gains to 4.16% in Asia hours following weaker-than-expected U.S. jobless claims data.
While the rupee has erased a substantial part of its gains from late last week and Monday, the bias remains to the upside, a foreign exchange trader at a private bank said.
The rupee had risen to 82.77 on Monday, its highest level since early September.
"83 on the upside and 83.20 on the downside are key levels to watch for the rupee," the trader said. "A break on either side could spur directional momentum."
A string of U.S. economic data, including strong retail sales and higher than expected consumer inflation, and pushback from central bank officials has prompted investors to pare bets on aggressive rate cuts by the Federal Reserve, offering support to the dollar.
Investors are currently pricing in a 54% chance of a Fed rate cut in March, down from about 73% as of Jan. 11, according to CME's FedWatch tool.
"Though the technical trend for (dollar-rupee pair) is still weak... one should remain cautious as foreigners have turned net sellers in domestic equities," Dilip Parmar, a foreign exchange research analyst at HDFC Securities said.
Overseas investors have net sold Indian equities worth $463 million in January so far following net purchases of $7.9 billion in December. (Reporting by Jaspreet Kalra; Editing by Mrigank Dhaniwala)
