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TOKYO, Mar 16 (Reuters) The dollar stayed near a six-week low against the euro on Thursday as the market vacillated over how long the US unit can maintain its interest rate advantage over other major currencies.

The dollar fell for a third straight session on Wednesday, dented by a Treasury Department report showing net capital inflows into U.S. assets in January were less than the amount needed to finance that month's record trade deficit.

A prime lure for such inflows has been rising U.S. rates, but the dollar was bruised this week on doubts about how much further the Federal Reserve will tighten policy, while rates climb in the euro zone and as Japan nudges closer to bumping up rates.

''The market has almost taken it for granted that the Fed is going to raise rates in March and May. That's why it's overreacting to disappointing numbers,'' said the chief trader at a European investment bank in Tokyo.

''The continuous trend in economic data is going to decide future Fed policy,'' he added.

The market has priced in a rise to 4.75 percent from 4.5 percent at the Fed's policy meeting at the end of March, but confidence about another hike in May now seems to have been shaken after a run of mixed U.S. economic data.

For more clues about whether additional Fed tightening is needed to stamp out inflation risks, traders are waiting to see data on US consumer prices in February, due at 1330 GMT.

Atlanta Fed President Jack Guynn, who has a vote on the Fed's policy-setting panel, said late on Wednesday that the US economy looks set for steady growth and low inflation but is not fully out of the woods when it comes to possible price pressures.

In early Asian trade, the euro was little changed on the day at $1.2065 A rise above $1.2094 would mark a fresh six-week high.

The dollar edged up against the Japanese currency to 117.60 yen from around 117.40 yen in late U.S. trade on Wednesday.

The euro edged up to 141.85 yen from around 141.70 yen.

The European Central Bank is expected to boost rates again in coming months after lifting its key rate earlier in March to 2.5 percent on the heels of a rise in December -- the central bank's first tightening since October 2000.

Markets are also pricing in a half percentage point of tightening from the Bank of Japan by the end of the year, from rates of virtually zero at present, after the central bank ended its super-easy monetary policy last week.

REUTERS SK RAI0710