The Rupee closed modestly weaker on Wednesday, as companies hedged their dollar exposures and as traders assessed the stronger outlook for the Asian currency a day after a trade deal with the U.S. led to its sharpest rally in over 7 years. Dollar demand related to maturing positions in the non-deliverable forwards market, corporate hedging and modest portfolio inflows were among the factors that influenced the rupee on Wednesday, traders said. Before building positions in either direction, market participants are trying to calibrate for the fresh ranges the currency may settle into after a sharp rally spurred by the announcement of a trade deal with the U.S. The trade deal is positive for the rupee in the near-term but Indian authorities must "tread that fine line between supporting the currency when required and providing longer term reasons for domestic and international investment," said John Ewart, investment manager at Aubrey Capital Management. The U.S. dollar's recent recovery will be short-lived, holding steady before resuming a broader decline later in the year, a Reuters survey of currency strategists showed, as markets cling to interest rate cut expectations amid concerns about the Federal Reserve’s independence. The euro is forecast to hold broadly steady at its current $1.18 level at end-February and $1.185 in three months, though there was little change among FX strategists in a Reuters poll taken between January 30 and February 4 on expectations of a weaker greenback over the medium-term. The six-month and one-year median euro forecasts of $1.20 and $1.21 respectively were the joint-highest levels in Reuters polls since September 2021, last matched in October 2025. Asked how the net-short dollar trade would evolve by end-February, all but two of 50 respondents said positioning would remain net-short, a view they have maintained since at least April last year. Even with inflation running above 2% for nearly five years, the longest stretch since the early 1990s, interest rate futures traders are still pricing in two rate reductions this year. The Japanese yen hit a near 18-month low of around 159/$ in January, but recently has come under renewed pressure following comments by Prime Minister Sanae Takaichi seeking voter support for higher spending and tax cuts, talking up the benefits of a weaker yen. Oil prices climbed about 3% on Wednesday on a report that the U.S. would not agree to change the location and format of talks with Iran planned for Friday. Brent futures rose $2.06, or 3.06%, to $69.39 a barrel at 1:09 p.m. EST (1809 GMT), while U.S. West Texas Intermediate (WTI) crude rose $1.93, or 3.05%, to $65.14.......