MUMBAI, April 17 (Reuters) - Indian government bond yields are expected to trade in a tight range this week, with the minutes of the Reserve Bank of India's (RBI) latest monetary policy meeting acting as major trigger, while a softer dollar has improved the rupee's outlook.

India's benchmark bond yield ended at 7.2252%on Thursday. It rose 1 basis point (bps) last week, compared with 11 bps in the first week of the current financial year.

Traders expect the benchmark yield to move in the 7.20%-7.30% range this week.

Bond prices have rallied since earlier this month when the RBI maintained status quo on policy rates against market expectations of a 25 bps hike. The minutes of that policy meeting are due on Thursday.

"We remain bullish on government bonds and expect incoming data, global conditions and impending central banks' dovish tones to support the yields going forward," said Sandeep Yadav, head of fixed income at DSP Mutual Fund.

It is possible that the RBI will retain its monetary policy stance of 'withdrawal of accommodation' in June as well to indicate a higher bias to tackle inflation risks and pending more clarity on variables such as monsoons and global developments, ICICI Securities Primary Dealership said.

Apart from the minutes, the focus will remain on the heavy debt supply scheduled for each week even as state-run banks have been selling heavily.

Meanwhile, the Indian rupee finished marginally higher at 81.85 per U.S. dollar last week, after rising for three straight weeks.

The majority of its gains last week came on Thursday when the dollar index fell past key support levels due to cooling U.S. headline inflation.

Retail sales data out on Friday was mixed, increasing bets of a 25 bps Fed hike at the May meeting, which, according to futures pricing, could be the final one. And that, analysts say, is expected to keep the long-term dollar weakness trend intact.

With the most critical U.S. and India data releases out of the way, the rupee is expected to move between 81.80 and 82.50 this week, traders said.

"Improving macros of the economy is being substantiated by steady inflows from global investors in recent weeks, supporting a view of modest rupee appreciation, subject to the RBI relenting," said Jayaram Krishnamurthy, founding partner and chief operating officer of Almus Risk Consulting.

Foreign investors have been net buyers of about $800 million worth of Indian equities so far this month.

KEY EVENTS:

* China Q1 GDP - April 18, Tuesday (7:30 a.m. IST)

* UK March CPI - April 19, Wednesday (11:30 a.m. IST)

* Eurozone March HICP - April 19, Wednesday (2:30 p.m. IST)

* U.S. March home sales - April 20, Thursday (7:30 p.m. IST)

* India minutes of RBI's April meeting - April 20, Thursday (5:00 p.m. IST)

* U.S. April Mfg and Svcs flash - April 21, Friday (7:15 p.m. IST) (Reporting by Anushka Trivedi; Editing by Savio D'Souza)