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The Indian rupee is likely to nudge higher on Monday, supported by a rise in expectations that the U.S. Federal Reserve may begin to ease policy rates in September but weakness in the Chinese yuan may limit the local currency's gains.

Non-deliverable forwards indicate the rupee will open flat or slightly higher against the U.S. dollar, compared with 83.4850 in the previous session.

The rupee is likely to "trend sideways around 83.45 with a slightly positive bias", a foreign exchange trader at a private bank said.

Asian currencies were mostly rangebound, while the offshore Chinese yuan weakened slightly to 7.29.

Data released on Friday showed that U.S. nonfarm payrolls grew by 206,000 jobs in June, slightly higher than economists' forecasts, but the unemployment rate rose to 4.1%, while annual wages increased at the slowest pace in three years.

Odds of a September rate cut rose above 75% after the data, weighing on the dollar and U.S. bond yields. The dollar index was at 104.9, while the 10-year U.S. Treasury yield inched up to 4.30% in Asia after falling 7 basis points on Friday.

Federal Reserve Chair Jerome Powell's semi-annual monetary policy testimony to U.S. lawmakers will be in focus on Tuesday and Wednesday. India and the U.S. will also report their consumer inflation readings this week.

Powell's testimony "could be an opportunity for him to share whether the odds of a September rate cut have improved with the latest data", ING Bank said in a note.

KEY INDICATORS:

** One-month non-deliverable rupee forward at 83.56; onshore one-month forward premium at 8 paisa

** Dollar index at 104.91

** Brent crude futures down 0.1% at $86.4 per barrel

* Ten-year U.S. note yield at 4.3%

** As per NSDL data, foreign investors bought a net $660.1mln worth of Indian shares on July 4

** NSDL data shows foreign investors bought a net $231.4mln worth of Indian bonds on July 4