FOREX-U.S. dollar mixed as investors hold back ahead of Fed meeting

    * Yen pressured as BoJ cuts inflation forecast
    * Fed widely seen keeping easy policy stance
    * Bitcoin continues rally, ethereum hits record high
    * Graphic: World FX rates

 (Adds comment, updates prices)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, April 27 (Reuters) - The dollar was mixed against major peers on Tuesday, gaining against the
yen and commodity currencies, with investors biding time ahead of a policy decision by the Federal Reserve
on Wednesday.
    The yen, meanwhile, struggled after the Bank of Japan kept monetary policy on hold and projected that
inflation will fail to reach its key 2% target through early 2023.
    Trading in currencies was largely subdued ahead of the Fed's two-day meeting, which ends on Wednesday,
when no change to policy is expected.
    The market will pay close attention to comments from Fed Chairman Jerome Powell, who is likely to
address concerns and questions about whether improving economic conditions warrant a withdrawal of monetary
easing. Analysts, however, expect Powell to stick to the Fed's ultra-accommodative stance, which should
weigh on Treasury yields and the dollar.
    "The Fed is widely expected to maintain current policy settings on Wednesday, but traders are well aware
that a hawkish shift - an acknowledgement of underlying economic strength - could trigger renewed dollar
upside," said Karl Schamotta, chief market strategist at Cambridge Global Payments in Toronto.
    "If signs of optimism leak through in the official statement or during the press conference, investors
are likely to bring tapering expectations forward and drive Treasury yields upward. Awareness of this risk
is keeping traders parked in the dollar," he added. 
    In afternoon trading, the dollar index, which tracks the U.S. currency against six peers, was
flat at 90.897, after dipping to the lowest since March 3 overnight at 90.679.
    The dollar added 0.6% to 108.72 yen against the Japanese unit, another safe-haven currency,
continuing its rise from the seven-week low of 107.48 reached on Friday. Action Economics noted in its blog
that the currency pair closed above the 50-day moving day average of 108.367 for the first time since
January, a sign of strength for the dollar.
    Japan last week declared a third state of emergency for Tokyo, Osaka, and two other prefectures to
contain the pandemic, clouding prospects for a fragile recovery and the yen's outlook.
    The dollar has fallen nearly 3% since late March as U.S. Treasury yields traded in narrow ranges after
retreating from a 14-month high of 1.776%, slashing the currency's rate appeal.
    The euro was little changed at $1.2087, not far from the two-month high of $1.2117 reached on
    The commodity-linked Australian dollar, a barometer of risk appetite, eased 0.5% to US$0.7765,
after a sharp rally overnight that took it just shy of a five-week peak. 
    The offshore Chinese yuan slipped 0.1% to 6.48 per U.S. dollar, after rising to a seven-week top of
6.4710 per dollar on Monday.
    In cryptocurrencies, bitcoin hit a high of $55,354.59, following a 10% surge on Monday amid
reports JPMorgan Chase is planning to offer a managed bitcoin fund.
    That snapped a five-day losing streak that had taken the digital token to the cusp of $47,000, with
losses accelerating amid worries about U.S. President Joe Biden's plan to raise capital gains taxes. Bitcoin
was last up 1.5% at $54,883.
    Ethereum, the second-largest cryptocurrency in terms of market cap, hit a record high of $2,683.65

    Currency bid prices at 3:21PM (1921 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct       High Bid    Low Bid
                                              Previous                   Change                   
 Dollar index                 90.8870        90.8850     +0.02%         1.007%        +91.0720    +90.8100
 Euro/Dollar                  $1.2088        $1.2087     +0.02%         -1.06%        +$1.2093    +$1.2058
 Dollar/Yen                   108.7100       108.0950    +0.58%         +5.22%        +108.7450   +108.0900
 Euro/Yen                     131.40         130.61      +0.60%         +3.53%        +131.4500   +130.5800
 Dollar/Swiss                 0.9141         0.9141      +0.00%         +3.32%        +0.9171     +0.9124
 Sterling/Dollar              $1.3903        $1.3906     -0.01%         +1.77%        +$1.3924    +$1.3860
 Dollar/Canadian              1.2401         1.2394      +0.06%         -2.61%        +1.2418     +1.2389
 Aussie/Dollar                $0.7768        $0.7802     -0.44%         +0.98%        +$0.7803    +$0.7762
 Euro/Swiss                   1.1049         1.1047      +0.02%         +2.24%        +1.1062     +1.1024
 Euro/Sterling                0.8692         0.8693      -0.01%         -2.74%        +0.8701     +0.8675
 NZ                           $0.7209        $0.7236     -0.38%         +0.38%        +$0.7237    +$0.7202
 Dollar/Norway                8.2710         8.2885      -0.07%         -3.55%        +8.3135     +8.2745
 Euro/Norway                  9.9997         10.0220     -0.22%         -4.46%        +10.0327    +9.9944
 Dollar/Sweden                8.3789         8.3783      +0.02%         +2.23%        +8.4191     +8.3747
 Euro/Sweden                  10.1283        10.1259     +0.02%         +0.52%        +10.1526    +10.1156
 (Reporting by Gertrude Chavez-Dreyfuss; Editing by William Maclean and Dan Grebler)