Can a SELECT with SELECT Subquery cause deadlock with Update query in SQL Server?
From my experience, when you use READ COMMITTED and the concurrency is high, deadlocks will happen. The frequency of deadlocks will grow with concurrency and length of transactions.

Reducing the transaction isolation level could improve things to the point that you will not have deadlocks due to SELECT statements, but still, there might be a chance to have deadlocks due to the UPDATE statements.

The best solution is to just assume that deadlocks are possible and will happen and to allow for a certain number of retries.