By Karen Brettell

NEW YORK (Reuters) – The dollar gained on the yen but edged lower against the euro on Wednesday as investors waited on U.S. inflation data due on Thursday for fresh clues on when the Federal Reserve is likely to begin cutting interest rates.

In cryptocurrencies, bitcoin fell after being whipsawed late on Tuesday after a social media message on the U.S. Securities and Exchange Commission’s (SEC) account claimed the regulator had approved bitcoin exchange traded funds (ETFs), but was later revealed to have been made by an unauthorized person.

The SEC will decide later in the day whether to approve an application from asset managers Ark Investments and 21Shares to launch a spot bitcoin ETF. More than a dozen bitcoin ETF applications, including from BlackRock, Fidelity and VanEck, are also pending with the agency.

The dollar index has held in a tight range since Friday when it was volatile, initially jumping on data showing strong jobs gains in December, before dropping on some soft underlying details of the employment report.

The dollar weakened further on Friday after a report by the Institute for Supply Management (ISM) also showed the U.S. services sector slowed considerably in December.

This week’s consolidation “was somewhat predictable in the sense that we have these huge gyrations last Friday on the back of the jobs data and the soft ISM,” said Marc Chandler, chief market strategist at Bannockburn Forex in New York.

The consumer price index (CPI) on Thursday is the next likely driver of dollar direction. It is expected to show that headline inflation rose 0.2% in the month and by 3.2% on an annual basis.,

Traders are pricing for the likelihood that the Fed will begin cutting rates in March as inflation eases back closer to the U.S. central bank’s 2% target.

But with aggressive rate cut bets already baked into prices, the dollar is holding above five-month lows reached in late December.

The dollar index was little changed on the day at 102.51. The euro gained 0.1% to $1.09425.

The greenback rose 0.69% to 145.47 yen.

Soft economic data this week in Japan may make it less likely that the Bank of Japan will raise rates out of negative territory this month.

“A vocal minority were talking about a rate hike at the end of this month when the Bank of Japan meets, but I think that people feel more comfortable with an April move,” said Chandler.

Data on Wednesday showed that Japanese workers’ real wages kept shrinking for a 20th month in November. Core inflation in Japan’s capital also slowed for the second straight month in December as cost-push price pressures continued to ease, data showed on Tuesday.

In crypto, bitcoin was last down 2.18% at $45,147. It briefly hit a 21-month high of $47,897 on Tuesday after the post that the SEC blamed on a hack.

Anticipation of a positive SEC decision on ETFs, which is likely to draw billions in new investments, has boosted bitcoin prices in the past two months.

“The reality is most who have followed the saga have moved on and the green light from the SEC is fully priced,” said Chris Weston, head of research at Pepperstone.

(Reporting By Karen Brettell; additional reporting by Joice Alves in London; editing by Jonathan Oatis)