SINGAPORE, May 28 (Reuters) - The dollar waned on

Tuesday following a slight pick up in risk appetite, but it held

tight ranges against its peers ahead of key inflation data from

major economies this week that markets are looking to for

guidance on the global interest rate outlook.

Currency moves were largely subdued in early Asia hours

after a quiet overnight session due to holidays in Britain and

the United States, but the overall mood was positive with world

shares firming.

The euro was a touch firmer at $1.0860 despite

some dovish comments from European Central Bank (ECB)

policymakers on Monday and data showing German business morale

stagnated in May.

German inflation data due on Wednesday and the wider euro

zone bloc's reading on Friday will be watched for confirmation

of an ECB rate cut expected next week, alongside clues on how

soon subsequent easing from the central bank could come.

"The ECB is preparing itself for rate cuts next week, but

the importance is what happens beyond that, and the lack of

guidance from ECB speakers is telling in that sense," said

Rodrigo Catril, senior FX strategist at National Australia Bank

(NAB).

"Obviously, the inflation dynamics will set the tone in

terms of what to expect."

Sterling held near an over two-month high and last

bought $1.2774, while the New Zealand dollar inched up

nearly 0.1% to peak at $0.6155, its strongest level since

mid-March.

Down Under, the Aussie edged 0.03% higher to

$0.6657, with the country's monthly consumer price index data

also due on Wednesday.

All of that data, however, will be a sideshow to the main

focus for markets on Friday when U.S. core personal consumption

expenditures (PCE) price index report is released - the Federal

Reserve's preferred measure of inflation - where expectations

are for it to hold steady on a monthly basis.

The outlook for U.S. rates has been the dominant driver of

currency moves over the past few years, and recent data from the

world's largest economy has blown hot and cold which has dented

policymakers' confidence on the pace and scale of rate cuts

expected this year.

"The market is well priced for a benign number, and that

needs to be delivered... for current Fed cut expectations for

this year to be sustained," said NAB's Catril.

"Any number that surprises on the topside, we think, will

provide quite a big reaction in terms of a move up in U.S.

yields and for the dollar to rip higher."

Against a basket of currencies, the dollar dipped

0.01% to 104.55.

Elsewhere, the yen languished near the 157 per

dollar level and last stood at 156.87 per dollar, though it was

on track for its first monthly gain for 2024, helped by

suspected intervention from Japanese authorities towards the end

of April and start of May.

Tokyo inflation data, a leading indicator of nationwide

figures, is similarly due on Friday, which could provide further

clues on how soon subsequent rate hikes from the Bank of Japan

(BOJ) could come.

BOJ Governor Kazuo Ueda said on Monday the central bank will

proceed cautiously with inflation-targeting frameworks, noting

that some challenges are "uniquely difficult" for Japan after

years of ultra-easy monetary policy.

In cryptocurrencies, bitcoin eased 0.47% to $69,255,

while ether fell 0.2% to $3,882.20.