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TOKYO, July 24 (Reuters) The dollar steadied on Monday after ending last week lower on growing expectations that the Federal Reserve could pause its two-year run of raising interest rates next month.

After hitting three-month highs against the euro and the yen, the dollar slid following Fed Chairman Ben Bernanke's remarks to Congress last week that inflation would likely ease in coming quarters as economic growth slows, raising the prospect of a halt to credit tightening.

The Fed's next move depends on economic data, and traders are interested in whether the upcoming numbers tally with the central bank's view that the economy is slowing. This week's slate includes consumer confidence, home sales and durable goods.

''The market is going to confirm if the economy is really slowing or not,'' said the chief trader at an European investment bank in Tokyo.

''If the numbers back up Bernanke, the dollar could slowly go under.'' The yen got a boost on Friday, the first anniversary of China's 2.1 percent revaluation of the yuan, on some expectations that Beijing might announce it would unshackle the yuan further.

The Japanese currency held the gains when Beijing instead announced it would raise its bank reserve requirements by 0.5 percentage points in a bid to cool its racing economy.

Investors often buy yen as a proxy to bet on yuan strength since the Japanese currency is Asia's most heavily traded.

In early Tokyo trade, the dollar edged up to 116.30 yen after ending Friday trade down 0.7 percent, well off the three-month peak of 117.88 yen marked last week.

The euro inched down to $1.2680 after rising 0.5 percent on Friday. It hit a three-month low of $1.2456 last week.

The single European currency was little changed at 147.50 yen just short of a record high of 147.88 yen.

In a time of receding expectations for Fed tightening, the euro has benefited from growing confidence that the European Central Bank will raise rates next month.

Sterling was little changed at $1.8580 just short of a six-week high around $1.8600 marked on Friday, helped by strong growth data for the second quarter.

(Reporting by Brent Kininmont, editing by Mike Miller; Reuters messaging: rika.otsuka.reuters.comzreuters.net; Tel +81-3-3432-8604)) Reuters AD VP0715