ICICIdirect expects the US dollar to meet supply pressure at higher levels. ''Utilise upsides in the pair to go short on the USDINR pair. March futures in the range of 65.70-65.80 with target 65.55-65.45.''

The rupee rose to a more-than-16-month high against the USD but pared its intraday gains as investors stayed cautious ahead of the US Federal Reserve's interest rate decision. The rupee will remain supported as the Fed signalled it is on course for three-hikes in 2017 against market expectations of four hikes before the event.

The US dollar fell against major currencies as the Fed toned down the expectations of four rate hikes in 2017. The dollar index fell almost 1% while the Australian$ was the biggest gainer as a rise in commodity prices also help AU$.

In the currency futures market, the most traded dollar-rupee March contract on the NSE ended at 65.80. The March contract open interest fell 0.69% from the previous day. April contract open interest rose 22.51% from the previous day.

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