LONDON, Jan 27 - The euro held its ground on the dollar in Tuesday's early European trade as investors remained cautious ahead a key Group of Seven (G7) meeting in 10 days, while the greenback remained soft against the yen. The dollar briefly fell below 106 yen on speculation that Japanese authorities would refrain from aggressively intervening in currency markets before the meeting of the G7 industralised nations' club. Markets were looking ahead to the Federal Reserve's Federal Open Market Committe (FOMC) two-day meeting which starts on Tuesday. The Fed is expected to repeat its promise to keep interest rates low for a "considerable period", maintaining downward pressure on the dollar. At 0750 GMT the euro was steady on the day against the dollar at $1.2470 after losing more than a cent in the previous session. The euro is now more than four cents down from record highs set on the dollar in mid-January.
The dollar was down 0.15 percent on the day versus the yen at 106.14 following a brief fall below 106 in Asian trading hours. Sterling was also in focus with Prime Minister Tony Blair facing a rebellion by members of his own party in a parliamentary vote on higher education funding later on Tuesday and publication of a report on Wednesday into the suicide of an Iraq weapons expert last year. The pound was 0.2 percent lower on the day at $1.8096 and 0.13 percent weaker at 0.6881 pence per euro . Economic data releases scheduled for Tuesday include Germany's Ifo business climate index due at 0900 GMT and the U.S. Conference Board's consumer confidence index at 1500 GMT. The Ifo is seen up to 97.0 in January from the previous reading of 96.80. U.S. consumer confidence is expected to have improved this month with the index rising to 96.3 from 91.3 in December. For full report on major currencies click on [FRX/] For previous updates on currency moves click on [USD/-M]//www.reutres.com