Rupee gains on dollar's dip, but nears resistance zone

MUMBAI, July 12 (Reuters) - The Indian rupee rose on Wednesday as the dollar slipped ahead of the U.S. inflation data, with the local currency nearing a zone, that traders said, it may find difficult to overcome.

The rupee was at 82.29 to the U.S. dollar, up from 82.3650 in the previous session. The rupee has been on a recovery path due to the dollars decline since the U.S. non-farm payrolls data on Friday.

It is “difficult to see\” the USD/INR moving below 82.20-82.30, the resistance-turned-support area, a forex trader said, adding short-term speculators and importers are likely to step in.

The dollar index extended losses in Asian trading hours, slipping to a two-month-low of 101.38. That lifted Asian currencies between 0.1% and 0.3%.

Data due later in the day is expected to show that both headline and core U.S. consumer price index rose 0.3% month-on-month in June, per a Reuters poll of economists.

On a year-on-year basis, the headline and core CPI are expected to have climbed 3.1% and 5%, respectively.

The inflation reading comes less than two weeks before the U.S. Federal Reserve meeting, at which a 25 basis points rate hike is widely expected.

“If the consensus is correct about headline and core inflation rising by 0.3% month-on-month, the Fed will not be convinced that inflation can return to its 2% target this year,\” DBS Research said in a note.

Indias June inflation data, due about half an hour before the U.S. data, is expected to have risen 4.58% on-year from 4.25% in May, according to a Reuters poll.

The rupee forward premiums were mostly unchanged before the U.S. and India data. The 1-year implied yield was at 1.64%.