By Brigid Riley

TOKYO (Reuters) -The dollar held steady against other major currencies on Friday, as investors weighed an ambiguous U.S. consumer price inflation report against market bets that the Federal Reserve will cut rates as soon as March.

U.S. consumer prices increased in December as rents maintained their upward trend, edging 0.3% higher for the month and up an annual 3.4%, versus economists' forecast in a Reuters poll for a 0.2% gain and 3.2% rise, respectively.

Still, traders are pricing in a 73.2% chance for the Fed's first 25 basis point (bps) cut to come in March, with several more to follow, according to the CME Group's (NASDAQ:) FedWatch Tool.

"Once again, we see a disparity between market pricing, data and the Fed’s narrative," said Senior Market Analyst at City Index Matt Simpson.

"The U.S. dollar didn’t behave in such a way to suggest USD bears are running scared," he said.

The was firm at 102.25, down from Thursday's high of 102.76 but well ahead of the five-month low of 100.61 hit in December when traders began to aggressively price in a raft of Fed cuts for this year.

Fed officials took little fresh from the data, with Chicago Fed Bank President Austan Goolsbee signalling he's not sure if there's been enough progress for the Fed to start cutting rates.

"When we have weeks or months of data to come, I don't like tying our hands," he said.

Cleveland Fed President Loretta Mester said on Thursday that the latest CPI figures means that it would likely be too soon for the central bank to cut its policy rate in March.

"What is important for the Federal Reserve is that the last mile in bringing inflation back to target appears to be more difficult," wrote Commerzbank (ETR:) analysts in a note, adding that they expect the first rate cut will not come in March as markets are betting.

The euro stuck around $1.0977 after gaining on the dollar the previous day, while sterling was last trading at $1.2776, up 0.1% on the day.

The Japanese yen, meanwhile, hovered around 145.11 per dollar, keeping off the one-month low of 146.41 hit against the greenback on Thursday.

The yen was aided by easing U.S. Treasury yields, which remained down around 3.98% following the CPI data. [US/]

The was largely flat at 7.170, despite fresh economic data suggesting the economy was starting the year on shaky footing, as regulators continued to support the currency amid expectations policymakers will soon have to roll out more stimulus.

Elsewhere in Asia, the Taiwan dollar was largely unchanged ahead of Saturday's pivotal presidential and parliamentary elections. [EMRG/FRX]

In cryptocurrencies, bitcoin last stood mostly unchanged at $46,118.00, having surged to a two-year high overnight after the U.S. Securities and Exchange Commission on Wednesday gave the green light to offer ETFs linked to bitcoin.

Ether () was down 0.27% at $2,596.50.