LONDON, Feb 12 Reuters The dollar was steady on Monday as a holiday in most major Asian markets subdued the start of what could turn into a busy week, with all eyes on U.S. inflation data for clues on when the Federal Reserve may start to cut rates.

The euro was down a whisker at 1.0778, edging off a 10day high touched in early trading after the past week saw a small bounce back after steady declines in 2024 . A reading of the euro zone39;s economic growth in the fourth quarter on Wednesday could offer fresh direction.

The pound was flat at 1.2632, though the Japanese yen strengthened a fraction to 149.04 per dollar as the approaching release of U.S. CPI data for January on Tuesday capped moves.

Changing expectations of when and how quickly central banks will cut interest rates as inflation falls are a significant driver of currency markets at present.

Strong jobs data earlier this month has largely taken a March Federal Reserve rate cut off the table, with markets currently seeing a move in May as more likely than not.

Analysts expect U.S. core CPI to come in at 0.3 month on month in January, but a still elevated 3.8 year on year.

Carol Kong, currency strategist at Commonwealth Bank of Australia, noted that Fed rates setters are saying they want more evidence that inflation will stay near the 2 target before considering a cut.

Persistently neartarget inflation andor a weakening labour market would give them that evidence, she said, adding that Tuesday39;s data is…