* Oil slips as hostilities pause, but rate hike speculation

remains

* A 25-bps Fed rate hike forecast stands at roughly 40%, per

LSEG

* BOE, BOJ widely expected to leave rates unchanged this

week

(Updates prices to European afternoon trade)

By Medha Singh and Satoshi Sugiyama

July 28 (Reuters) - The U.S. dollar steadied near a

four-week high on Tuesday as traders weighed the prospect of a

Federal Reserve interest-rate hike this week, even as falling

oil prices eased some inflation concerns.

The dollar index, which measures the greenback

against a basket of currencies including the yen and the euro,

ticked up 0.06% to touch its highest since June 25 at 101.58.

The euro was about flat at $1.1362, while sterling

dipped 0.07% to $1.328. Against the Japanese yen, the

dollar rose to 163.915.

The dollar's resilience reflects a sharp repricing of Fed

expectations in recent months. Treasury yields have climbed

steadily since April as the U.S.-Iran conflict stoked concerns

about inflation and a hawkish debut from Fed Chair Kevin Warsh

reinforced expectations of higher interest rates.

While oil prices have retreated after the U.S. paused

attacks on Iran and President Donald Trump hailed "good talks"

with Iran, yields remain near their multi-month highs.

"The rise in Treasury yields by 20bp across the curve over

the past month means financial conditions have tightened and the

Fed would be viewed as playing catch up if it decided to pull

the trigger," wrote Kenneth Broux, head of corporate research FX

and rates at Societe Generale.

The Fed concludes its two-day policy meeting on Wednesday,

with a growing number of major brokerages warning that

policymakers could raise rates, given this month's surge in oil

prices.

Markets are pricing a nearly 40% chance of a 25-basis-point

rate increase on Wednesday, up from about 20% a week ago,

according to LSEG data. Traders see almost a 95% probability of

a hike by September.

There was a risk that investors have become too convinced of

a near-term rate hike, meaning any dovish outcome could force

traders to unwind long-dollar positions, Dominic Bunning, head

of G10 FX strategy at Nomura said.

Investors raised long dollar positions while increasing

short sterling bets in the week ended July 24, according to

Morgan Stanley options pricing data.

Investors will also look to U.S. second-quarter GDP data and

the Fed's preferred inflation gauge, core PCE inflation, this

week.

In other major currencies, the Australian dollar

weakened 0.4% versus the greenback to $0.696, as Australia's

central bank chief Michele Bullock said underlying inflation

remained too high and a further slowdown in domestic demand may

be required to tame prices.

PACKED CENTRAL BANK WEEK

Both Bank of England and Bank of Japan are widely expected

to keep interest rates unchanged at their meetings on Thursday

and Friday, respectively, and caution against rising inflation.

Traders have been on intervention watch as the yen's

relentless decline drove it to a fresh 40-year low.

The BOJ is expected to keep the prospect of further rate

hikes alive to support the currency, though policymakers are

likely to remain vague on the timing and pace of any tightening.

"Can they almost coordinate a little bit whereby the BOJ can

deliver a slightly more hawkish message and the (Ministry of

Finance) comes in, then you get more bang for your buck,

effectively? We saw it in July 2024 .. that was almost the sweet

spot for Japan intervention," Bunning said.

"It can be potentially more futile and that's the risk they

face."

Tokyo stepped into the market in April and May as the yen

breached 160 per dollar, though the moves did little to alter

its broader decline.

In a Reuters NEXT Newsmaker interview on Tuesday, Japanese

Finance Minister Satsuki Katayama reiterated that Tokyo's stance

of responding to currency moves as needed was unchanged, adding

that she believed Washington shared that view.

The yen offered little reaction to news of an earthquake

with a magnitude of 7.1 striking Japan's southern Kumamoto

prefecture on Tuesday.

In cryptocurrencies, bitcoin fell 2.3% to $63,414.16.

Ether declined 3.4% to $1,879.71, the biggest percentage

drop in a month.