FOREX-Dollar inches up as investors brace for Fed guidance

* Dollar holds before U.S. Fed rate decision

* Graphic: Peripheral bond yields: http://reut.rs/2eHvHPE

* Graphic: World FX rates in 2017 http://tmsnrt.rs/2egbfVh (Adds U.S. market open, new throughout, changes dateline, previous LONDON)

By Dion Rabouin

NEW YORK, July 26 (Reuters) - The dollar was steady on Wednesday, edging just above a 13-month low touched the previous session against a basket of major currencies, and trading in a tight range ahead of an announcement from the U.S. Federal Reserve later in the day.

While traders saw virtually no chance that the Fed would raise U.S. overnight interest rates, the market was anxiously awaiting a statement from Chair Janet Yellen to determine whether the central bank plans to move forward with further rate hikes this year.

Fed fund futures prices show investors see only a 3 percent chance of a rate increase on Wednesday and just over a 50 percent chance of an increase by year end.

"There are two very weak spots in the U.S. economy: Inflation is very tepid and the consumer is not really spending," said Boris Schlossberg, managing director of FX strategy at BK Asset Management.

"Has the recent spate of data changed (the Fed's) mind at all or are they full-speed ahead on their policy path? That, I think, is what the market wants to hear from the Fed, how they answer that."

The Fed has raised rates twice so far this year, and a collection of Federal Open Markets Committee economic expectations forecast the central bank raising rates once more by December.

On Wednesday, the central bank will issue its decision following the end of a two-day policy meeting at 2 p.m. EDT (1800 GMT). Economists polled by Reuters expect the benchmark lending rate to remain in a target range of 1.00 percent to 1.25 percent.

The dollar index, which tracks the greenback against six major world currencies, was 0.1 percent higher at 94.151. On Tuesday it fell to 93.638, its lowest since June 24, 2016.

The dollar jumped 0.7 percent against the Swiss franc to 0.9590 franc, its highest in nearly a week.

The Swiss franc also tumbled to its lowest levels against the euro in 18 months, weakening 0.6 percent to 1.1154 per euro. It was on track for its biggest two-day losing streak since April, down more than 1 percent.

The euro dipped 0.1 percent to 1.1640. On Tuesday, it rose as high as $1.1711, its highest since August 2015, and just a hair below a 2-1/2-year peak, boosted by a stronger-than-expected German business survey.

Against the Japanese yen, the dollar was also little changed at 111.80 yen. (Editing by Jonathan Oatis)