MUMBAI, Nov 22 (Reuters) - The Indian rupee is tipped to open slightly higher against the U.S. dollar on Tuesday on the back of the recovery in the Chinese yuan.

The rupee is expected at around 81.70-81.75 per dollar, compared to 81.84 in the previous session. The local unit has traded in an 81.40-81.90 range over the last three sessions.

It can be "safely assumed" that this is the new range, plus or minus 20 paisa on either side, a trader at a Mumbai-based bank said.

For the rupee to fall significantly below 82, we will have to see a "renewed big uptrend" on the dollar, which at present looks like a low probability outcome, the trader said.

The offshore Chinese yuan was up about 0.3% to the dollar at 7.1574, recouping Monday's losses. The dollar index dipped 0.2% to near 107.50 on the day.

Investors are currently focussed on China's response to new COVID-19 flare-ups and its impact on the outlook for Asia's largest economy.

Additionally, investors are looking to assess how high U.S. interest rates will reach and whether the Federal Reserve will slow down its pace of rate hikes.

In recent sessions, the optimism on the Fed outlook has faded a bit, with the dollar index inching up. Near-maturity Treasury yields have recovered a part of the decline, fuelled by the softer U.S. inflation data, with the 2-year now above 4.50%.

Meanwhile, it was a volatile session for oil. Prices plunged by more than $5 a barrel overnight after the Wall Street Journal reported an increase of up to 500,000 barrels per day will be considered at the OPEC+ meeting on Dec. 4.

Prices recovered after Saudi Arabia denied the media report.

KEY INDICATORS:

** One-month non-deliverable rupee forward at 81.93; onshore one-month forward premium at 15 paise

** USD/INR NSE Nov futures settled on Monday at 81.7750

** USD/INR Nov forward premium at 2.5 paise

** Dollar index down at 107.52

** Brent crude futures up 0.3% at $87.7 per barrel

** Ten-year U.S. note yield at 3.82%

** SGX Nifty nearest-month futures up 0.2% at 18,248

** As per NSDL data, foreign investors bought a net $33.3 million worth of Indian shares on Nov. 18

** NSDL data shows foreign investors bought a net $48.1 million worth of Indian bonds on Nov. 18 (Reporting by Nimesh Vora; Editing by Savio D'Souza)