The rupee commenced better at 59.27 a dollar from last close of 59.33 at the Interbank Foreign Exchange (Forex) market. It was later trapped in a narrow range of 59.24 and 59.36, before settling at overnight closing level of 59.33.
The dollar index was down 0.10 per cent against a basket of six major global currencies.
Forex traders said the ECB is expected to tackle concerns of deflation by cutting its benchmark interest rates into negative territory for the first time.
The ECB is expected to cut its refinancing rate by 15 bps to 0.10 per cent and deposit rate by 10 bps to -0.10 per cent, according to Edelweiss Alternative Research.
Pramit Brahmbhatt, Veracity Group CEO said, "Rupee traded range bound to slightly strong in futures. FIIs buying in the local equities helped the indices to trade positively. Tussle between the dollar demand from importers and strong local equities forced the rupee to trade in a tight range."
Trading range for the spot rupee is expected to be within 59.00 to 59.80, he added.
Meanwhile, the benchmark S&P BSE Sensex today shot up by 213.68 points, or 0.86 per cent, while FIIs bought shares worth Rs 192.56 crore yesterday, as per provisional data.
Meanwhile, premium for forward dollar ended mixed.
The benchmark six-month premium payable in November edged down to 238.5-240.5 paise from 239-241 paise. Far-forward contracts maturing in May, 2015 rose to 480-482 paise from 476-478 paise yesterday.
The Reserve Bank of India fixed the reference rate for dollar at 59.2973 and for the euro at 80.6999.
The rupee fell back slightly to 99.42 against the pound from 99.41 previously and also turned negative to end down at 57.89 per 100 Japanese yen from 57.82.
However, it improved further to 80.72 per euro from 80.82.