TOKYO, June 18 (Reuters) - The dollar drifted lower on

Tuesday, extending the previous day's losses against the euro

and sterling, as market jitters over the risks of a far-right

French government receded.

The U.S. currency failed to get a lift from a rise in

Treasury yields overnight, with investors awaiting a key retail

sales report and comments from Federal Reserve officials to

better gauge the timing and pace of interest rate cuts.

The Australian dollar hovered close to the middle of its

trading range over the past month with the Reserve Bank of

Australia seen holding rates steady later in the day.

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

against the euro, sterling and four other major peers, edged

slightly lower to 105.26 in early Asian trading hours,

continuing its retreat from Friday's 1 1/2-month high of 105.80.

The index's rally was mostly driven by a sharp euro selloff,

after French President Emmanuel Macron called a shock snap

election last week in response to his ruling centrist party's

trouncing by Marine Le Pen's eurosceptic National Rally in the

European Parliament elections.

"It's becoming clear that a hung parliament is the market's

base case, and calmer heads would argue that any government that

does involve Le Pen's RN party is unlikely to rock the fiscal

boat too intently," said Chris Weston, head of research at

Pepperstone.

"Le Pen has a Presidential election to win in 2027, and that

can only happen if the party win the respect of the bond

market."

The euro added 0.04% to $1.0738, adding to the

previous session's 0.26% rise. Sterling gained 0.06% to

$1.2712.

The dollar was little changed at 157.66 yen.

The greenback has been pulled in both directions, with mild

U.S. inflation readings contrasting with an overall hawkish

stance by Fed officials at last week's policy meeting, when they

trimmed their previous median projection for three quarter-point

rate cuts this year to one.

Philadelphia Fed President Patrick Harker revealed on Monday

that he is in the single-cut camp, but left the door open to

changing his view depending on incoming data.

A long list of Fed officials take to the podium at various

venues later in the day, including the Boston Fed's Susan

Collins and the Richmond Fed's Thomas Barkin.

Well before that, the Reserve Bank of Australia is widely

expected to hold rates steady for a fifth straight meeting later

on Tuesday, with the majority of economists in a Reuters poll

forecasting a first cut coming in the fourth quarter.

"Financial markets are pricing almost no chance of a change

to the Reserve Bank of Australia's cash rate today (and) we

agree," Commonwealth Bank of Australia economist Kristina

Clifton wrote in a note.

"Unless there is a material change in the post-meeting

statement, we expect the RBA's announcement to have no material

impact on AUD."

The Aussie added 0.08% to $0.66175. New Zealand's

kiwi dollar also rose 0.08% to trade at $0.6136.