Fed seen pausing rate hike this week
ECB expected to raise rates in June, July
BOJ seen keeping ultraeasy policy stance

NEW YORKLONDON, June 12 Reuters The dollar inched higher on Monday, trading within narrow ranges, as investors remained cautious ahead of key policy decisions this week from several central banks, led by the Federal Reserve, which is expected to keep interest rates on hold for the first time since January 2022.

Monetary policy meetings at the Fed, the European Central Bank ECB and the Bank of Japan BOJ will set the tone for the week as markets seek clues from policymakers on the future path of interest rates.

U.S. May inflation data is also out on Tuesday as the Fed kicks off its twoday meeting.

The greenback is responding to typical 39;dollar smile39; dynamics, tumbling as growth differentials converge and volatility fears drop across the financial markets, said Karl Schamotta, chief market strategist at Corpay in Toronto.

The dollar smile is a theory which refers to scenarios in which the U.S. currency outperforms its peers in two extremely different scenarios when the U.S. economy is strong and there is optimism in markets, or when the global economy is doing badly and risk appetites are low.

With evidence of a modest U.S. economic deceleration steadily accumulating, investors are betting that tomorrow39;s inflation print is more likely to undershoot expectations than overshoot them, and that is helping to reduce the odds on an…