Hi Rekha2064,
First of all I'm not a CPA, just a tax student right now and this is a good research question for me. Thank you for providing the opportunity.

Lets talk about the Dependent child test.
To claim for a dependent child, the dependent must meet all of the following five criteria.

1. Relationship test
Niece qualifies as a dependent child, no problem for you

2. Age
a. The child must be under age of 19 (i suspect not as she is preparing USMLE)
b. A full time student under age of 24.
I doubt your niece will pass this test. Only preparing for USMLE may not be considered as a fulltime student. Before just looking at residency test i would suggest you to consider in this point.
c. permanently or totally disabled.

3. Residency test.

for Residency test pls check page 11 of 519, it specifically says, you cannot claim as a dependent unless that person is a U.S. citizen, residential alien, U.S. national or a resident of Canada or Mexico, for some part of the year.
further on page 12 it talks about the foreign national students under citizen or resident test. "Foreign students bought to this country under a qualified international education exchange program .......do not meet this test."

4. Support test
Which you meet as you support more than 1/2 of her expenses

5. Special test for qualifying child of more than one person.
Since you are only claiming as a dependent, you will meet this test.

So my point is, I doubt she will pass age test as well as residency test.