NEW YORK, June 7 Reuters The dollar fell against the euro and yen on Wednesday with no major catalysts to drive market direction as investors awaited U.S. inflation data for May due on Tuesday, and the Federal Reserves interest rate decision the following day.

The U.S. central bank is expected to hold rates steady as it evaluates the impact of recent rate increases, though Fed fund futures traders are pricing for an additional rate hike in July.

Consumer inflation data on Tuesday is expected to show that prices rose by 0.30 in May.

We expect a fair degree of consolidation ahead of the Fed decision next week, said Bipan Rai, North American head of FX strategy at CIBC Capital Markets in Toronto. That CPI numbers going to be critical for the Fed decision as well, to me it makes sense that we dont see large bets placed either way at this point.

The euro was last up 0.30 against the dollar at 1.0726 and the U.S. unit dipped 0.22 to 139.33 yen . The dollar index was down 0.29 at 103.77.

Traders have also priced out most expectations that the Fed will cut rates this year as inflation remains above target.

There is persistence and resilience in inflation in the U.S., but also in much of the G10, as well, meaning that central banks are likely to be cautious, said Rabobank chief strategist Jane Foley.

Data on Wednesday showed that the U.S. trade deficit widened sharply in April as imports of goods rebounded while exports declined, a trend that if sustained, could result…