The rupee retreated 3 paise on Wednesday to settle at 86.08 against the US dollar, giving up part of its sharp gains from the previous session, amid a firmer dollar index and foreign fund outflows.At the interbank foreign exchange, the local unit opened at 86.00 and touched a high of 85.79 before closing at 86.08. The rupee had jumped 73 paise on Tuesday, marking its biggest single-day gain in nearly five years, according to PTI.Forex analysts cited broad dollar strength and crude oil volatility as key drivers. “The rupee made a high of 85.79 before oil companies stepped in and took it lower to 86.13, with the market still sceptical of the Iran-Israel ceasefire,” said Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP.Brent crude rose 1.43% to $68.10 per barrel in futures trade, as geopolitical tensions eased following US President Donald Trump’s claim of brokering a truce between Israel and Iran.The dollar index was up 0.21% at 98.06, reflecting strength against major global currencies.“The rupee closed almost flat amid quiet regional price action. Traders are now focused on upcoming trade-related updates for short-term direction. Near-term, USD/INR has support at 85.10 and resistance at 85.90,” said Dilip Parmar, Research Analyst at HDFC Securities.Markets are also awaiting India’s current account and industrial production (IIP) data for fresh direction. “We await the current account data from the RBI to gauge how it performed during 2024–25,” Bhansali added.In the domestic equity market, benchmark indices ended sharply higher. The Sensex surged 700 points to 82,755.51, and the Nifty advanced 200 points to close at 25,244.75.However, foreign institutional investors (FIIs) remained net sellers, pulling out Rs 2,427.74 crore worth of equities on Wednesday, according to exchange data.