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The dollar held tight ranges against most peers on Thursday as traders awaited key U.S. inflation data for cues on Federal Reserve policy, while the focus on the massive interest rate gap between Japan and the U.S. helped it make some gains on the yen.

Against the Japanese yen, the dollar slowly inched up after it fell more than 3% last week, its biggest weekly percentage drop since early December 2022.

The yen received a slight boost in the Asian morning following the release of the Bank of Japan's summary of opinions from its April meeting, showing many board members saw the need to raise rates and eventually reduce the bank's bond purchases.

The move was brief, however, with the market decidedly bearish on the currency.

Last week's Fed policy meeting and downside surprise in U.S. job growth have markets increasing bets for two rate cuts this year. But a chasm remains between Japan's ultra-low yields and those in the United States.

"The market is not really worried about the sudden turn by the Fed. So in this sense, the market is biased for the upside for dollar/yen," said Masafumi Yamamoto, chief currency strategist at Mizuho Securities.

Traders remain wary of possible currency intervention by Tokyo, potentially triggering some sharp, "nervous moves" as the greenback edges higher, he added, likely keeping dollar/yen locked in the 155-160 range.

Japan's top currency diplomat Masato Kanda on Thursday reiterated a warning that Tokyo is ready to take action in the currency market.

Focus swings to the April U.S. producer price index (PPI) and the consumer price index (CPI) out next week, which markets will watch for signs that inflation has resumed its downward trend toward the Fed's 2% target rate.

Fed Bank of Boston President Susan Collins said overnight that the U.S. economy needs to cool to return inflation back to target.

The dollar index rose to 0.05% to 105.55, while the Japanese yen was mostly flat at 155.59 per greenback.

Sterling was down 0.07% at $1.2487 ahead of the Bank of England's policy decision later on Thursday.

The BOE is likely to take another step towards its first interest rate cut in four years as inflation falls.

The big question for investors is whether the BOE suggests that a cut could come in June - when the European Central Bank has already signalled it will reduce borrowing costs.

The euro was steady at $1.0743.

In cryptocurrencies, bitcoin fell 0.21% to $61,436.49.