By Jason Hovet

PRAGUE, May 29 (Reuters) -Central European currencies held steady on Monday as risk sentiment improved after a weekend U.S. debt ceiling deal but remained off the peaks they touched earlier this month.

A stronger U.S. dollar this month has helped trim some of the gains the region's currencies have enjoyed this year while still high interest rates attracted fund flows.

The dollar, a sluggish economic outlook and chances of interest rate cuts in the region are combining to keep currencies away from the multi-month or multi-year highs scaled since April.

Data last week showing Germany - a key economic partner - entering recession added to the woes.

"The Czech crown is not favouring the combination of higher bets on a further rise in U.S. rates, weak German figures and a stronger dollar," Czech bank CSOB said in a morning note, adding even a recovery in global stocks was not relieving the pressure.

Meanwhile, stock markets in the region were mixed.

Trading was light with markets in the U.S., the UK and several European countries closed. In central Europe, Hungary was shut for a holiday.

The Hungarian forint EURHUF= edged down 0.3% to 372.00 to the euro in trading outside local markets and was off a more than one-year high of 368 hit in mid-May, before the country's central bank cut its one-day deposit rate to 17% from 18%, while leaving its base rate unchanged.

Elsewhere, the crown EURCZK= was flat at 23.678 per euro, still well off a nearly 15-year high beyond 23.300 touched in April.

Czech central bankers have played down chances of an interest rate cut later this year as priced in by markets. Earlier in May, the central bank (CNB) came close to hiking interest rates in a 4-3 vote that backed continued stability.

"In the current environment, the crown is unlikely to test (its highs) unless the CNB hikes next (meeting) and that would probably be a big surprise," a trader said.

In Poland, central banker Gabriela Maslowska wrote in an article for Catholic broadcaster Radio Maryja on Monday that chances of interest rate cuts starting in 2023 were getting bigger in part because of the strong zloty.

The Polish currency EURPLN= hit a nearly two-year high beyond 4.48 to the euro last week. It traded at 4.5285 to the euro on Monday, little moved compared to Friday's close.

Reporting by Jason Hovet in Prague; Editing by Sriraj Kalluvila

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