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TOKYO, June 5 (Reuters) The dollar was mired near aone-year low against the euro on Monday after surprisingly soft U.S.

employment data last week helped squelch expectations for the Federal Reserve to raise overnight rates again this month.

The 75,000 jobs created in May was far short of forecasts for a 175,000 increase, providing more evidence of slowing economic growth that will likely help cool core inflation now running at the upper end of the comfort zone of some Fed officials.

The Fed's 16 straight increases in short-term rates to 5 percent had boosted the dollar's yield advantage in 2005 and fired a rally in the U.S. currency.

But expectations of a coming Fed pause, along with worries that Washington wants a weaker currency to help curtail its massive trade deficit, have all helped to undermine the dollar this year.

Fed policymakers have made clear further credit tightening would depend on the shape of incoming economic data.

Sue Trinh, senior currency strategist at RBC Capital Markets, said in a note to clients there is little risk of more Fed tightening to drive the dollar higher.

''Consequently, position-squaring dollar rallies are likely to prove moderate and temporary,'' she said.

The euro has got a boost from the European Central Bank's expected string of rate increases, with speculation still rife the ECB could boost rates at a meeting this week by a whopping half percentage point to 3 percent.

In early Asian trade, the dollar was little changed at 111.70 yen versus 111.75 yen in late New York trade on Friday.

The euro was also little changed at $1.2925 not far from the one-year peak of $1.2972 struck in mid-May. Against the yen, the single currency was flat near 144.35 yen Among Monday's big events, at 1815 GMT Fed Chairman Ben Bernanke, ECB President Jean-Claude Trichet and BOJ Deputy Governor Toshiro Muto all participate in a panel discussion in Washington at the International Monetary Conference.

U.S. Treasury Secretary nominee Henry Paulson makes the rounds in Washington, meeting with Senator Chuck Grassley, chairman of the Senate Committee on Finance.

REUTERS PDS VP0740