(Freshens prices)

By Herbert Lash and Saikat Chatterjee

NEW YORK/LONDON, Jan 26 (Reuters) - The dollar held below a 2-1/2 week high on Wednesday as risk sentiment stabilized hours before policymakers at the Federal Reserve are widely expected to indicate their readiness to start raising interest rates starting in March.

Markets have been on a rollercoaster ride this week as the combination of a hawkish Fed and slowing growth have unnerved investors, prompting them to dump high-flying technology shares and seek refuge in safe-haven assets such as the dollar.

The currency briefly touched a Jan. 7 high of 96.30 against a basket of currencies =USD on Tuesday before ending below that level.

In relatively quiet trading on Wednesday, it was a shade higher at 96.057 with U.S. stock futures up more than 1%, indicating a stronger start on Wall Street ESc1 .

"A Fed that attempts to soothe and reassure rocky markets with an orderly outlook for rate hikes could weigh on the greenback," said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington.

"While a Fed that dials up inflation concerns would strike a dollar-positive hawkish note," Manimbo said in a morning note.

But investors' appetite for riskier assets such as stocks and emerging market currencies was playing a bigger role for the dollar than the expected path of Fed rate hikes, said Citibank strategist Ebrahim Rahbari.

Traders also are waiting for details on how the U.S. central bank plans to reduce its almost $9 trillion balance sheet, a process dubbed quantitative tightening (QT).

"Market sentiment remains fragile," TD Securities strategists said, noting that "any hints 'around the starting point for QT or 'sooner' and 'faster' on hikes could be market-moving."

Money markets price in a first Fed rate rise in March, followed by three more quarter-point increases by year-end.

The euro EUR= slid 0.11% to $1.1287 after falling to $1.12640 overnight, its lowest since Dec. 21.

Against the Swiss franc, the euro EURCHF=EBS stabilised at 1.0379 francs per euro, not far from a mid-2015 low of 1.03 hit on Monday.

Monetary policy has been a sore point for the euro, given the European Central Bank has downplayed prospects for higher rates this year, making it the main catalyst behind its roughly 4.5% slide versus the dollar the past six months, Manimbo said.

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Currency bid prices at 9:21AM (1421 GMT) Description

RIC

Last

U.S. Close Pct Change

YTD Pct

High Bid

Low Bid

Previous

Change

Session

Dollar index

=USD

96.0570

95.9730

+0.10%

0.412%

+96.1640

+95.9080 Euro/Dollar

EUR=EBS

$1.1287

$1.1302

-0.13%

-0.72%

+$1.1311

+$1.1272 Dollar/Yen

JPY=EBS

114.2550

113.8550

+0.36%

-0.75%

+114.3100 +113.7800 Euro/Yen

EURJPY=

128.95

128.67

+0.22%

-1.05%

+128.9800 +128.6000 Dollar/Swiss

CHF=EBS

0.9194

0.9183

+0.12%

+0.79%

+0.9210

+0.9174 Sterling/Dollar GBP=D3

$1.3505

$1.3507

+0.00%

-0.13%

+$1.3522

+$1.3494 Dollar/Canadian CAD=D3

1.2575

1.2634

-0.46%

-0.53%

+1.2630

+1.2560 Aussie/Dollar

AUD=D3

$0.7167

$0.7153

+0.20%

-1.41%

+$0.7177

+$0.7141 Euro/Swiss

EURCHF=

1.0377

1.0377

+0.00%

+0.08%

+1.0391

+1.0370 Euro/Sterling

EURGBP=

0.8355

0.8370

-0.18%

-0.54%

+0.8373

+0.8343 NZ

NZD=D3

$0.6681

$0.6685

-0.04%

-2.37%

+$0.6698

+$0.6678 Dollar/Dollar

Dollar/Norway

NOK=D3

8.8850

8.9365

-0.55%

+0.89%

+8.9380

+8.8725 Euro/Norway

EURNOK=

10.0292

10.0994

-0.70%

+0.16%

+10.1028

+10.0076 Dollar/Sweden

SEK=

9.2524

9.2628

-0.19%

+2.60%

+9.2813

+9.2448 Euro/Sweden

EURSEK=

10.4437

10.4635

-0.19%

+2.05%

+10.4790

+10.4288

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World FX rates Link
USD positions Link

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Reporting by Herbert Lash, additional reporting by Reporting
by Saikat Chatterjee in London and Kevin Buckland in Tokyo;
Editing by Tomasz Janowski, John Stonestreet, Alexandra Hudson