TOKYO, Jan 29 The dollar held near a four-year high against the yen on Monday, supported

TOKYO, Jan 29 (Reuters) The dollar held near a four-year high against the yen on Monday, supported by solid U.S. economic data that helped convince more investors that an interest rate cut by the Federal Reserve may not be necessary this year.

For its part, the yen remains hemmed in after soft consumer price figures late last week cast doubt on the likelihood of the Bank of Japan raising rates next month, which would keep the currency's yield lagging far behind its rivals.

Trading was quiet in Tokyo as investors awaited a swarm of U.S. economic data this week, in addition to a Fed rate-setting meeting ending on Wednesday, when the central bank is widely expected to keep rates unchanged at 5.25 percent.

Analysts said figures that further support the view that the U.S. economy remains buoyant, keeping the Fed on the lookout for inflation risks, could translate into more dollar buying.

''Strong U.S. data could push the dollar higher this week,'' said Nobuo Ibaraki, a forex manager at Nomura Trust and Banking, adding that few in the market were expecting a rate cut this year.

''Meanwhile, yen weakness is going to continue.'' Investors showed limited initial reaction to data on Japanese retail sales in December, which fell 0.3% from the same period a year earlier, a smaller decline than the consensus forecast for a 0.5% drop.

The dollar was at 121.50 yen little changed from late last week and hovering near last week's high of 121.80 yen, which was the highest level since 2003.

The dollar was boosted on Friday thanks to data showing a pickup both in new home sales and U.S.-made durable goods in December.

The euro was at $1.2920 after Friday's figures helped to prod the single currency to a two-week low of $1.2877. Against the yen, the euro was at 157 yen not far from a record high 158.62 yen touched last week.

The Fed kicks off its two-day policy meeting on Tuesday.

Investors were also sitting tight for U.S. data on fourth-quarter economic growth, as well as employment and consumer sentiment figures due later in the week.

Tokyo traders were also awaiting Japanese industrial output figures for December due on Tuesday.

Reuters DH VP0610