SINGAPORE, June 13 Reuters Major currencies held their gains on Thursday against a dollar knocked by softerthanexpected U.S. inflation, save for the yen which remained squeezed ahead of a Bank of Japan meeting, as U.S. policymakers signalled rates would be kept high for a while yet.

Overnight the euro advanced 0.6 and punched above its 200day moving average, last buying 1.0804. The Aussie dollar was at 0.6647, after rising above 0.67 overnight, and the New Zealand dollar leapt to a fivemonth high above 0.62 before settling at 0.6170. The yen was down by about 0.2.

Gains had been larger in the immediate aftermath of the U.S. inflation report, which showed consumer prices flat monthtomonth in May against market expectations of a 0.1 rise.

They were pared when the Federal Reserve left the funds rate on hold at 5.255.5 and policymakers39; median projection for the number of cuts this year fell to just one, from three in March.

Sterling rose 0.5 overnight to 1.2798, and was a tad lower as European markets opened. Moves were modest in Asia trade, though beaten down currencies such as Indonesia39;s rupiah saw some relief.

Despite the Fed39;s projections, markets stuck with pricing in almost two 25basispoint rate cuts this year.

I think markets are looking at the U.S. dollar as weakening, with fluctuations in between, said Westpac strategist Imre Speizer in Auckland. That39;s mostly due to Fed rate cuts, which are still priced in for this year.

China39;s yuan was steady…