MUMBAI - The Indian rupee remained mostly steady against the U.S. dollar following the release of April's U.S. inflation data, as the data didn't produce any significant movement.

This has left traders looking for other market catalysts to help break the current trading range. The U.S. inflation rate for the year was slightly lower than anticipated, which has increased the likelihood of the Federal Reserve pausing in June.

According to Anindya Banerjee, the head of research for FX and interest rates at Kotak Securities, the recent U.S. inflation data did not create much impact on the Indian rupee as it was in line with expectations.

Banerjee noted that the USD/INR currency pair is currently confined within a range of 81.60 to 82.10 levels, while the dollar index is fluctuating between 100.70 and 102.70. Due to the absence of any significant surprises, there was no noticeable volatility in the currency markets.

According to a spot dealer, it is unclear what will be the catalyst for breaking out of the current range, as the market has already priced in a pause from the Federal Reserve.

Unless there is a significant shift in U.S. growth concerns, traders may continue to play the current range. Investors now perceive over a 90% probability that the Fed will not hike rates in June, but the question is when it will change course and begin cutting rates.

Futures suggest that a rate cut may occur in September, and according to ING Bank, November and December are also likely times for the Fed to adjust its policy to a more neutral setting.

As a result of the overnight decline in U.S. yields, rupee forward premiums rose, with the 1-year implied premium increasing by 4 basis points to 2.17%.