* Dollar trades firmer, but nears one-month low

* Markets keep focus on intensifying Iran conflict

* Higher gas prices seen limiting euro gains

(Recasts first paragraph, updates prices throughout, adds

analyst comments)

By Laura Matthews and Stefano Rebaudo

July 16 (Reuters) - The dollar edged higher against major

peers on Thursday while remaining near a one-month low,

reflecting expectations that the U.S. economy will remain

resilient, the Federal Reserve will hold rates steady this month

and oil price swings may calm.

U.S. unemployment benefits filings fell last week,

suggesting continued labor market stability, while U.S. retail

sales increased marginally in June as lower gasoline prices

weighed on receipts at service stations.

The U.S. economy is less exposed to energy shocks than many

of its peers, helping attract safe-haven flows into the dollar

when oil prices rise, often at the expense of the euro and yen.

Oil prices rose 0.77% to $85.59 on Thursday as

escalating U.S.-Iran conflict heightened energy supply concerns

after Tehran asked Yemen's Houthis to stand ready to disrupt

shipping through the Red Sea.

FED HIKE CHANCES FADE

"We have received two cooler than expected inflation reports

this week, which should allow the Fed to punt on any potential

rate hikes for now, which should weigh on the dollar," said Tim

Holland, chief investment officer at Orion.

"If things settle down in the Middle East and oil retraces

its recent pop, we think talks of a Fed rate hike will fade and

talk of peak inflation will pick up."

The U.S. dollar index, which tracks the currency

against six peers, rose 0.17% to 100.62, hovering near its

lowest since June 18 and on track for a weekly decline.

Chances for a Fed hike in July were 12%, versus a 45%

implied probability at the start of the week. Markets still see

even odds of at least a 25 basis-point increase in September,

according to Fed funds futures prices via CME Group.

ECB RATE PATH IN FOCUS

The euro slipped 0.11% to $1.1450. Investors are

closely monitoring European gas futures, which have

risen to their highest levels since March, stoking concerns that

higher energy costs could weigh on the euro zone economy and

limit further appreciation of the euro.

The European Central Bank is seen as more hawkish than the

Fed, with markets betting on two additional rate hikes into 2027

and some economists not ruling out a first move next week.

"Some ECB officials might actually be inclined to push more

forcefully for another rate hike," Carsten Brzeski, global head

of macro at ING, said, after mentioning the renewed escalation

in the Middle East.

Sterling held near a two-month high at $1.3510, last

down 0.21% after economic data, with investors expecting that

Britain's incoming prime minister will pick a fiscally

conservative finance minister.

YEN UNDER THE SPOTLIGHT

The yen hovered near multi-decade lows, with attention on

potential moves by Japan's Government Pension Investment Fund

after Finance Minister Katsunobu Kato said last week the

government wants a "substantial" increase in domestic asset

investment.

Analysts said the GPIF has the greatest capacity among

Japanese investors to influence the forex market. GPIF conducts

a strategy review every five years and completed its latest one

in 2025. However, it can still adjust its holdings within its

target allocation bands.

The dollar rose 0.12% to 162.37. It hit a

multi-decade high at 162.84 early this month.

"Markets had a busy start of the week, with encouragingly

benign CPI and PPI prints, Kevin Warsh's testimony to Congress,

and the resumption of hostilities in the Middle East," said John

Velis, Americas Macro Strategist at BNY. "It seems as if FX and

fixed income markets are taking a breather after all that news."