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By Stefano Rebaudo

Nov 27 (Reuters) - The U.S. dollar fell to a one-week

low against its major peers on Wednesday as investors grew

cautious about President-elect Donald Trump's tariff pledges

while rebalancing their portfolios before the end of the month.

Markets will closely watch Personal Consumption Expenditures

(PCE) price index due out later on Wednesday, before U.S.

markets close for the Thanksgiving holiday on Thursday.

Trump's vows on Monday of big tariffs on Canada, Mexico and

China, the United States' three largest trading partners, have

left investors jittery.

Markets will remain edgy on expectations for announcements

and possible U-turns from Trump, who takes office in late

January.

Some analysts argued that inflation risks could prevent

Trump from ushering in more disruptive measures.

"We believe that Trump realizes that his win was almost

entirely due to 3i's -- inflation, inequalities and immigration

-- with prices being key," said Viktor Shvets, global head of

desk strategy at Macquarie Capital.

"Unless there is an improvement, the electorate's revenge

could be severe, and there is not much time, as within 12

months, mid-terms will dominate," he added.

Shvets noted that Trump has picked Scott Bessent as Treasury

Secretary, who is expected to keep a leash on U.S. deficits and

to use tariffs as a negotiating tool.

The dollar index, which measures the greenback

against six rivals, was last down 0.45% at 106.42, after hitting

106.33, its lowest since Nov. 20. It rose by around 30% since

Nov. 6, the day after the U.S. election.

"The recent sharp dollar appreciation largely decreases the

asset values in dollars outside U.S. and hence increases the

rebalancing need to sell the dollar at the month-end," said

Sheryl Dong, forex strategist at Barclays.

The yen outperformed, lifted by growing bets for a

December rate hike in Japan, and position adjustments.

The dollar dropped more than 1% versus the yen, with the

selloff accelerating after the cross fell below the 200 day

moving average at 151.998.

Analysts flagged some relief as the country is not in the

firing line of Trump's possible tariffs.

"Japan has a strong hand in dealing with U.S. trade

concerns," said Jane Foley, senior forex strategist at RaboBank.

It "is the U.S.'s largest overseas holder of U.S. Treasuries

and the largest provider of foreign direct investment into the

U.S.," she added.

The dollar was last down 1.09% to 151.58 versus

the yen, after hitting 151.20, its lowest since Oct. 23. The

greenback dropped almost 2% in two sessions.

"The fact that tariffs against China are now only to be

increased by 10% and not by 60%, as was previously threatened,

was therefore interpreted positively for the yen," said Carsten

Fritsch, strategist at Commerzbank.

Data showed last week that Japan's exports expanded faster

than expected in October, led by a pick-up in chip equipment

demand in China.

China's offshore yuan was flat at 7.2582 after

hitting 7.2730 the day before, its lowest since end-July.

The Japanese currency has already priced in some

geopolitical risk premium, analysts said.

A ceasefire between Israel and Iran-backed group Hezbollah

came into effect on Wednesday, under a deal that aims to end

hostilities across the Israeli-Lebanese border.

The euro was up 0.37% to $1.0528.

The single currency reacted with relief that Trump didn't

mention Europe trade. However stocks in European car

manufacturers fell sharply on Tuesday as they have huge

production capacity in Mexico that is sold to the U.S.

Against its Canadian counterpart, the greenback was roughly

unchanged at C$1.4054, after touching a 4-1/2-year high

of $1.4178 on Tuesday.

The dollar remained off its highest against the Mexican peso

since July 2022, and was last down 0.20% on the day.

The New Zealand dollar rose after the Reserve Bank

of New Zealand cut benchmark rates by 50 basis points to 4.25%

while noting inflation had declined to near the mid-point of its

targeted range.

The Australian dollar fetched $0.6480, up 0.10%

after domestic consumer price inflation stayed at a three-year

low in October.

In cryptocurrencies, bitcoin was up 1.8% at $93,271,

way below recent highs.