* Investors will focus on Fed's reaction to recent market turmoil
* Euro undermined by ECB easing exceptions
* Aussie slips as crude futures slide on oversupply fears
By Lisa Twaronite
TOKYO, Jan 26 (Reuters) - The dollar inched down slightly on Tuesday, though major currencies did not stray far from recent ranges as investors were cautious ahead of the outcome of the Federal Reserve's two-day policy meeting beginning later in the session.
Investors will be parsing the U.S central bank's message to determine what, if any, effect volatile global markets, plummeting oil prices and heightened fears of a Chinese slowdown will have on the Fed's previously stated intentions to continue raising rates this year.
U.S. interest rates futures implied traders placed a mere 13 percent chance the Fed will hike rates this week.
"There's a lack of fresh catalysts," said Sue Trinh, senior currency strategist at RBC Capital Markets in Hong Kong.
While the perceived safe-haven yen edged higher as regional equities and crude oil slipped, Trinh noted that highly volatile crude oil futures remain above more than 12-year lows plumbed last week. O/R
The dollar nudged down about 0.1 percent against the yen to 118.17 JPY= , but remained comfortably above a one-year low of 115.97 plumbed last week. The euro slipped about 0.2 percent to 128.16 yen EURJPY=
In addition to the Fed, investors are also focused on the Bank of Japan's two-day meeting that will end on Friday.
Sources familiar with the Japanese central bank's thinking say it is likely to cut its core consumer inflation forecast for the coming fiscal year to possibly below 1 percent. strategists and market participants expect the BOJ to hold pat despite the increasingly worrying economic data and stressed markets, though speculation that policymakers might muster additional stimulus steps have underpinned the greenback.
"The market was caught long JPY amid the rapid build-up in expectation for easing. There should be further scope for a reversal to weigh on JPY ahead of the event," wrote Todd Elmer, Citi's Asian head of G10 FX strategy.
"Citi attaches up to a 40 percent probability for a move from the BOJ," he added.
When asked on Tuesday about the chance of additional BOJ easing this week, Japanese Economy Minister Akira Amari said the country's central bank does not signal in advance whether it will ease monetary policy the way the European Central Bank does. ECB's style is quite bold, but I don't think the BOJ would adopt this approach," Amari said.
The euro was steady at $1.0847 EUR= , above last week's two-week low of $1.0776 but still undermined by growing expectations that the ECB is gearing up to take more easing steps of its own.
ECB President Mario Draghi promised on Monday to increase inflation, rejecting criticism of the central bank's loose monetary policy and arguing that sluggish growth in prices was damaging the euro zone economy. now price in a 10-basis-point cut in the ECB's -0.3 percent deposit rate in March, and many investors also expect the central bank to increase its monthly asset purchases.
The Ifo German business confidence deteriorated to an 11-month low in January, with manufacturers particularly concerned that Europe's largest economy will suffer from a slowdown in emerging markets. Aussie dollar AUD=D4 , meanwhile, was down about 0.1 percent to $0.6950, pressured by the slumping crude futures in relatively thin volume due to an Australian public holiday.
(Editing by Shri Navaratnam)