The Indian rupee is likely to open marginally higher on Wednesday as the dollar retreats in the lead up to U.S. inflation data that will give cues on the direction of U.S. interest rates. The 1-month non-deliverable forward indicated that the rupee will open at 86.

U.S. stocks are ticking higher Tuesday following an encouraging update on inflation. The S&P 500 was 0.5% higher in early trading. The Dow Jones Industrial Average was up 164 points, or 0.4%, as of 9:35 a.

On Wednesday, a strong dollar rally slowed down as traders were a little more cautious. They awaited a crucial U.S. consumer inflation report that was expected later in the day, keeping investors from making their big moves.

The dollar's towering rally hit a speed bump on Wednesday as traders turned cautious ahead of a closely watched U.S. consumer inflation report due later in the day, making them hesitant to take on new positions.