By Brigid Riley

TOKYO (Reuters) –

The U.S. dollar held steady against the yen and other major rivals on Wednesday as investors awaited a potential hawkish cut from the Federal Reserve before meetings of the Bank of Japan and other central banks this week.

The Fed is widely expected to deliver a 25-basis-point interest rate cut at the end of its two-day policy meeting on Wednesday, with markets pricing in a 97% probability, according to the CME's FedWatch tool.

Focus will be on policymakers' new economic projections for the upcoming year, specifically how much further the Fed thinks rates will be reduced in 2025. Given the string of robust inflation and activity data, the Fed may signal a slower pace moving ahead, possibly revising projections to indicate three cuts in 2025 instead of the current four, Tony Sycamore, market analyst at IG, noted in a client memo.

> "If the median dot shows just two cuts, this may be considered more hawkish, although it would align with current pricing in the rates market," he added.

Data released Tuesday revealed a resilient U.S. economy, with retail sales jumping 0.7% in November, due to increased motor vehicle and online purchases.

Investors are also assessing the potential impact of promised tariffs and tax cuts from the incoming Trump administration on the Fed's outlook.

The U.S. dollar index, measuring the greenback against six rivals, was little changed, down 0.04% at 106.89 after reaching 107.18 on Monday, its highest since Nov. 26.

Against the yen, the dollar was up 0.12% at 153.65, having retraced some of its recent gains as U.S. Treasury yields dipped ahead of the Fed's decision.

Markets have significantly reduced bets that the Bank of Japan (BOJ) will raise rates on Thursday, favoring a January hike, following numerous reports suggesting the bank may take a cautious approach.

Japan's exports increased for a second consecutive month in November, as reported on Wednesday.

The Bank of England is also anticipated to hold rates steady on Thursday, as investors adjust their expectations for cuts next year after data showed a larger-than-expected increase in British wage growth on Tuesday.

Sterling was nearly flat at $1.27095 ahead of the scheduled release of CPI figures for November later in the day. The euro sat at $1.0502, up 0.09%.

Among other central banks meeting this week, Sweden's Riksbank is expected to cut rates by as much as half a point, while the Norges Bank is likely to maintain rates.

The Swedish crown held at 10.9469, while the Norwegian krone hovered around 11.1793 against the greenback.

Elsewhere, the offshore yuan traded at 7.2885 per dollar, close to a 13-month low reached on Tuesday amid dismal expectations for Chinese economic growth. The Australian dollar, serving as a liquid proxy for the yuan, fell 0.17% to $0.6326 against the greenback, its lowest since November 2023. The kiwi fetched $0.57565, up 0.04%.

In the cryptocurrency market, Bitcoin dipped by 0.54% to $105,836.57 after reaching a high of $108,379.28 in the previous session.