Non-deliverable forwards indicate rupee will open at 82.88-82.90 to the U.S. dollar compared with 82.9625 in the previous session.
The one-month USD/INR NDF made a low of 82.92 in the New York session, implying a spot of 82.84. The dollar index had dipped to near 103.80.
Following the "reasonable" dollar selling, USD/INR will "have a follow through" to yesterday's price action, an FX trader at a bank said.
"Now the question will be whether the support of 82.80 is at risk."
The rupee on Tuesday had its best day in two weeks despite a mostly difficult day for Asian peers.
The dollar index's fall to below 104 came amid a slight dip in U.S. Treasury yields. The U.S. Treasuries tracked the UK and Canada on a day when there was not much economic data out from the world's largest economy.
Investors await the minutes of the Federal Reserve's January meeting, due to release during U.S. trading hours.
The Fed minutes "will be of particular interest to help gauge the central bank's thinking around the inflation path and incremental progress required for a policy pivot", ANZ said in a note.
Following the January Fed meeting outcome and on the back of an upbeat U.S. job report and the higher-than-expected inflation, investors have significantly scaled back expectations on how many rate cuts the central bank will deliver this year.
Investors are currently pricing in 90 basis points of rate cuts this year, down from more than 150 bps one-and-a-half months back.
KEY INDICATORS: ** One-month non-deliverable rupee forward at 82.98; onshore one-month forward premium at 8 paisa** Dollar index at 103.98 ** Brent crude futures at $82.54 ** Ten-year U.S. note yield at 4.2750% ** As per NSDL data, foreign investors net bought $21 million of Indian shares on Feb. 19
** NSDL data shows foreign investors net bought $23 million of Indian debt on Feb. 16
(Reporting by Nimesh Vora; Editing by Eileen Soreng)
By Nimesh Vora
