MUMBAI, Jan 23(Reuters) - The Indian rupee may see choppy price action in holiday-truncated week, taking cues from moves in the dollar index, while bond yields will track moves in U.S. Treasury yields.

India's foreign exchange, bond and money markets were shut on Monday as the Maharashtra state government had declared a public holiday. Indian markets will be closed on Friday for Republic Day.

The rupee rose on Friday to 83.0650 against the greenback, but notched a weekly decline of 0.17%. Traders expect the currency to hover between 82.90 and 83.30 this week.

While the rupee's bias is towards appreciation, unless it falls below 82.90-83 levels, the back and forth price moves are likely to continue, a foreign exchange trader at state-run bank said.

The rupee rose to an over four-month high of 82.77 last Monday but trimmed gains through the week on equity-related outflows and a rise in U.S. bond yields.

Upbeat economic data from the U.S. and pushback from Federal Reserve officials have prompted investors to pare bets on aggressive rate cuts, boosting the dollar and U.S. bond yields.

Investors are pricing around a 42% chance of a Fed rate cut in March, down from 73% as of Jan. 11, according to CME Group's FedWatch tool.

“The tug-of-war between central bank policy and market expectations of early rate cuts” continues to be the key factor, Abhilash Koikarra, head of forex and rates and Nuvama Professional Clients Group, said.

Last week, India's 10-year benchmark bond yield ended little changed on Friday at 7.1790%, after easing 5 basis points in the previous week. Traders expect the yield to fluctuate in a 7.15%-7.22% range this week.

Reserve Bank of India Governor Shaktikanta Das last week said that monetary policy must remain actively disinflationary, despite the recent sharp fall in core inflation.

India's core inflation fell to lowest level in four years in December, boosting hopes the rate-setting panel may change its stance to "neutral" next month.

Traders will continue to eye activity from foreign investors that have been buying bonds in the New Year. They will also await cues on market borrowing for the next financial year, as the government presents its budget on Feb. 1.

India's net government borrowing in the next fiscal is likely to remain largely unchanged, Parul Mittal Sinha, head of financial markets, India, at Standard Chartered Bank, said.

"Central government (is expected) to target a narrower FY25 fiscal deficit of 5.3%-5.6% of GDP, vs 5.9% in FY24, and this can lead to a net borrowing of 11.80 trillion rupees to 12.20 trillion rupees." KEY EVENTS: ** Bank of Japan rate decision - Jan. 23, Tuesday (Reuters poll: No change expected) ** U.S. Jan S&P Global manufacturing, services and composite PMI flash - Jan. 24, Wednesday ** European Central Bank monetary policy decision - Jan. 25, Thursday (6:45 p.m. IST)(Reuters poll: No change expected) ** U.S. Dec durable goods - Jan. 25, Thursday (7:00 p.m. IST) ** U.S. initial weekly jobless claims week to Jan. 15 - Jan. 25, Thursday (7:00 p.m. IST) ** U.S. Oct-Dec advance GDP - Jan. 25, Thursday (7:00 p.m. IST) ** U.S. Dec new home sales - Jan. 25, Thursday (8:30 p.m. IST) ** U.S. Dec personal consumption expenditure, core PCE index - Jan. 26, Friday (7:00 p.m. IST) (Reporting by Dharamraj Dhutia and Jaspreet Kalra; Editing by Mrigank Dhaniwala)