MUMBAI - The Indian rupee rose marginally against the dollar on Tuesday ahead of key U.S. inflation data that will likely impact expectations over the Federal Reserve's next steps on interest rates.

The rupee was at 82.6650 to the U.S. dollar by 10:22 a.m. IST compared with 82.7175 in the previous session.

The local currency over the last seven sessions has held a narrow 82.40 to 82.80 range.

That may change with the U.S. inflation data due later in the day. Any significant deviation from economists' expectations of easing inflation will impact the dollar index and Treasury yields, and correspondingly, the rupee.

The impact of a higher-than-expected print is seen more for the rupee relative to a downward surprise.

"If the U.S. CPI (consumer price index) turns out to be higher, USD/INR can try to break the 83 level and move higher," Srinivas Puni, managing director at QuantArt Market Solutions, said.

"If the CPI does come lower than expected or broadly in line, the chance of a very sharp move down for USD/INR is lower."

Economists polled by Reuters expect the January headline annual inflation rate to ease to 6.2% from 6.5% in the prior and the core rate to fall to 5.5% from 5.7%.

The inflation data follows a U.S. jobs report that prompted a change in expectations on the Federal Reserve rate outlook.

Currently, interest rate futures have fully priced in a 25 basis points (bps) rate hike in March with an outside chance of a 50 bps increase, according to the CME Fed Watch Tool. For May, there is a near probability of another 25 bps hike.

The rupee forward premiums inched up after India's consumer inflation rate rose more than expected. The 1-year implied yield rose about 4 bps to 2.14%.

(Reporting by Nimesh Vora; Editing by Sohini Goswami)