By Rae Wee

SINGAPORE (Reuters) - The dollar paused its rally on Tuesday, as traders reaffirmed their bets for a slew of Federal Reserve rate cuts this year on the belief that inflation in the U.S. is slowing sufficiently.

In cryptocurrencies, bitcoin hovered near its strongest level since April 2022 on growing anticipation of imminent approvals of spot bitcoin exchange-traded funds (ETF).

The euro last stood at $1.0950, away from its recent three-week low of $1.0877, while the Japanese yen distanced itself from the 145 per dollar level following a broad decline in the greenback as U.S. Treasury yields slipped. [US/]

The moves were partly driven by the New York Fed's latest Survey of Consumer Expectations which showed that U.S. consumers' projection of inflation over the short run fell to the lowest level in nearly three years in December.

A reading on U.S. inflation is due later in the week, which will likely provide further clarity on how much room the Fed has to ease rates this year.

"The big story last night, the catalyst, was the data regarding inflation expectations going forward," said Kyle Rodda, a senior financial market analyst at Capital.com.

"While it's still a tight labour market, we're still seeing those sort of disinflationary impulses in the United States, which again raises the probability that the Fed will have capacity to cut rates fairly soon."

Futures point to nearly 140 basis points worth of easing priced in for the Fed this year.

Against a basket of currencies, the U.S. dollar eased slightly by 0.08% to 102.22, having risen 1% last week.

Sterling advanced 0.04% to $1.2754, while the risk-sensitive Australian and New Zealand dollars likewise edged higher.

The Aussie last gained 0.04% to $0.6723, away from its three-week low of $0.6641 hit last Friday. The kiwi rose 0.05% to $0.6256 and was similarly some distance away from Friday's three-week trough of $0.6182.

In Asia, data on Tuesday showed core inflation in Japan's capital slowed for the second straight month in December, taking some pressure off the Bank of Japan (BOJ) to rush into exiting ultra-loose monetary policy.

The yen was little changed following the release, and was last 0.17% higher at 143.975 per dollar.

Elsewhere, bitcoin hovered near the $47,000 mark and last stood at $46,923, after having scaled a 21-month top of $47,281 in the previous session.

A raft of investment managers had on Monday disclosed the fees they plan to charge for their proposed spot bitcoin ETF, in another step toward approval this week by the U.S. securities regulator.

"Obviously, there's clearly fundamental reasons why you'd feel bullish about this - it shows greater integration of crypto assets into the traditional financial ecosystem, there's likely going to be increased flow and demand, by extension, for bitcoin and other cryptocurrencies," said Capital.com's Rodda.

"What I'd be very wary of is a 'buy the rumour, sell the fact' situation."

Ether, the second-largest cryptocurrency, steadied at $2,314.70.