The US dollar was rangebound against other major currencies in Asian trade today, with investors reluctant to take fresh positions ahead of the US Federal Open Market Committee meeting this week, dealers said.

At 1.30pm the euro was quoted at USD1.2595, compared to 1.2597 in early Sydney and 1.2587 late New York trading and the dollar was changing hands at 116.14 yen from 116.15 in Sydney and 116.25 in New York.

'The market is now speculating whether there is any chance that the US Fed may deliver a 50 basis points rate hike rather than a widely-expected 25 basis hike,' Commerzbank treasurer Ryohei Muramatsu said.

'If the US Fed offers a 50 basis rate hike as a means of containing inflation risk, such a decision is most likely to give a sharp boost to the dollar in the near-term,' he added.

The euro was little changed, as there was no follow through short-covering on the currency. The single currency rose overnight as investors covered short positions after European Central Bank officials hinted of further significant rate increases, dealers said.

ECB member Nout Wellink commented inflation risks had increased, while another member Yves Mersch warned of a possible 50 basis points hike at the August 3 meeting.

'While comments from ECB officials came as a surprise and they gave the euro a short-term boost, the market is wary of pushing the single currency up too much given recent patchy economic data,' Muramatsu said.