MUMBAI, Jan 15 (Reuters) - The Indian rupee this week will likely look to build on its nascent momentum, counting on more debt and speculative flows and the dollar's soft outlook, while government bond yields may consolidate after falling last week.

The currency ended higher at 82.9225 against dollar on Friday, posting its best weekly gain in a month. Traders expect the currency to move in 82.70 - 83.20 range this week.

"Does last week signal that the (USD/INR) near-term range has changed and has shifted lower?" a forex trader with a private bank said.

"For that to be a yes, we can't have a move back to 83.10-type levels, at the very least."

The crucial question will be whether USD/INR breaches "82.90 support and initiates a downward trend," Anindya Banerjee, head research - FX and interest rates - Kotak Securities, said.

The main focus for Asian currencies remains on where U.S. interest rates are headed. Last week's U.S. inflation data did not dent rate-cut bets, signalling that the dollar's outlook remained weak, according to analysts.

This week, traders are focussed on Federal Reserve Governor Christopher Waller's comments on Tuesday and U.S. retail sales data due on Wednesday.

Meanwhile, India's 10-year benchmark bond yield ended 5 basis points (bps) lower at 7.1795% last week, after rising 6 bps in the previous week.

Traders expect the yield to fluctuate in a 7.14%-7.22% range this week.

Indian bond yields eased last week after Bloomberg Index Services proposed inclusion of some securities in the Bloomberg Emerging Market Local Currency index from September.

This comes after JPMorgan said in September it would include India in its widely-tracked emerging market debt index from June, which had triggered heavy foreign purchases of government bonds.

Foreign flows along with bets of policy rates easing may push government bond yields lower this year.

The benchmark bond yield is likely to ease by around 50 basis points, reaching 6.75% in the coming months, while shorter-end yields could see sharper falls, leading to a steepening of the yield curve, Vikas Goel, managing director at the primary dealer PNB Gilts has said.

India's annual retail inflation rose at the fastest pace in four months in December, driven by a rise in prices of some food items, as it rose to 5.69% during the month from 5.55% in November, data showed on Friday.

Nomura said the Reserve Bank of India (RBI) would be alert to the risks of over tightening and was likely to shift its focus to growth, as inflation trends closer to 4% and the global rate cycle pivots.

"Given that RBI has also started supplying short term liquidity via its main 14-day Repo operation, we think time is right to change stance to neutral; however, we see it as a close call and assign 50% probability to the same," ICICI Securities Primary Dealership said in a note.

KEY EVENTS: ** India Dec WPI inflation - Jan. 15, Monday (12:00 p.m. IST) (Reuters poll 0.90% on-year) ** U.S. Dec import prices - Jan. 17, Wednesday (7:00 p.m. IST) ** U.S. Dec retail sales - Jan. 17, Wednesday (7:00 p.m. IST) ** U.S. Dec industrial production - Jan. 17, Wednesday (7:45 p.m. IST) ** U.S. Dec housing starts number - Jan. 18, Thursday (7:00 p.m. IST) ** U.S. initial weekly jobless claims week to Jan. 8 - Jan. 18, Thursday (7:00 p.m. IST) ** U.S. Jan Philly Fed Business Index - Jan. 18, Thursday (7:00 p.m. IST) ** U.S. Dec existing home sales - Jan. 19, Friday (8:30 p.m. IST) ** U.S. Jan U Mich sentiment prelim - Jan. 19, Friday (8:30 p.m. IST) (Reporting by Dharamraj Dhutia and Nimesh Vora; Editing by Mrigank Dhaniwala and Rashmi Aich)