FOREX-Dollar retreats from highs as investors eye central bank meetings amid Middle East conflict

(New throughout, adds new quote and updates prices)

* Dollar pulls back slightly, still near 10-month high

* Fed, ECB, BoE, BOJ among central banks to meet this week

* Focus on inflation, growth outlook as Middle East war drags on

* RBA expected to hike rates

By Chibuike Oguh

NEW YORK, March 16 (Reuters) - The dollar retreated from 10-month highs on Monday in a week packed with key central bank meetings even as uncertainty from the Middle East conflict continues to weigh on markets.

The dollar has benefited from a flight to safety since the U.S.-Israeli strikes on Iran began at the end of February and with oil prices surging. Other major currencies such as the euro have been hurt by their economies' dependence on oil imports.

But investors are positioning ahead of central bank meetings this week, including from the U.S. Federal Reserve, the European Central Bank, the Bank of England and the Bank of Japan.

"Everything is being driven by oil at present; I don't think the movement is necessarily correct," said Eugene Epstein, head of trading and structured products at Moneycorp in New Jersey. The euro reversed course after hitting a 7-1/2-month low earlier in the session, trading 0.62% higher at $1.1485. Sterling was up 0.61% at $1.3302 - just above the 3-1/2-month low it hit on Friday.

The dollar index was down 0.39% to 99.95, but was still trading near Friday's 10-month high of 100.54.

"The market has priced in a lot of hawkishness purely based on expectations of higher inflation because of this oil shock. I think that's very misplaced and will eventually work its way out in the coming weeks and maybe months," Epstein added.

"That's all directly affecting the dollar because if you look at the market expectations for Fed policy, we were priced in two cuts fully for 2026 and 50% chance of a third cut. Now, we are barely pricing in one cut."

The market is currently estimating a near 100% chance that the Fed will keep rates unchanged at the end of its meeting on Wednesday, according to the CME's FedWatch tool. Trump called on allies over the weekend to help secure the strait and said his administration was talking to seven countries about it. The Wall Street Journal reported that Washington plans to announce as early as this week that multiple countries have agreed to escort ships through the waterway.

Brent crude futures were down 2% at $102.2 a barrel, while U.S. West Texas Intermediate crude was down 4.6% to $94.14. Both contracts have surged more than 40% this month to their highest since 2022 driven by the Middle East conflict.

YEN HOVERS NEAR INTERVENTION ZONE The Australian dollar rose 1.2% to $0.70625, buoyed by hawkish rate expectations at home with the Reserve Bank of Australia expected to tighten policy on Tuesday.

Markets now price in a roughly 72% chance that the RBA could deliver a 25-basis-point hike. The yen traded just below 160 per dollar - its weakest levels since the last intervention to strengthen the currency in July 2024. It has come under pressure due to the nation's heavy reliance on the Middle East for energy supplies, with the war also throwing into question the BOJ's rate outlook.

The yen won a reprieve, pushing the dollar down 0.37% to 159.12 yen.

Elsewhere, the dollar weakened 0.25% to 6.887 versus the offshore Chinese yuan.

(Reporting Chibuike Oguh in New York; additional reporting by Rae Wee in Singapore and by Amanda and Dhara Ranasinghe in London Editing by Keith Weir)