FOREX-Dollar bounces higher as traders brace for inflation data

* Dollar gains after heavy loses last week
* U.S. inflation data due on Tuesday
* Euro back below $1.19, sterling bounces off two-month low
* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E

By Tommy Wilkes
LONDON, April 12 (Reuters) - The dollar gained ground on
Monday after last week's drop as traders assessed the outlook
for Treasury yields, while awaiting crucial U.S. inflation and
retail sales data in coming days.
Elsewhere it was a quiet start to a data-heavy week for
foreign exchange markets.
The euro dipped back below $1.19 while the British pound
briefly fell to a two-month low, with some analysts citing blood
clot concerns around AstraZeneca (NASDAQ:AZN)'s AZN.L COVID-19 vaccine,
which the UK has relied heavily on for its aggressive
vaccination programme.
The dollar's fortunes have been tied to the performance of
Treasury yields for most of 2021, after concerns about rising
inflation in the United States and a stimulus-fuelled economic
rebound triggered a significant jump in yields on U.S.
government bonds in February.
A fall in U.S. yields last week triggered the worst week for
the dollar in 2021, but the currency found some stability on
Monday.
Federal Reserve Chairman Jerome Powell said in a U.S. media
interview released on Sunday that the U.S. economy was at "an
inflection point" and looked set for a strong rebound in the
coming months, but he also warned of risks stemming from a hasty
reopening. Investors are now waiting for U.S. March inflation data due
on Tuesday.
"We are set to see the first evidence of the much
anticipated surge in inflation that is widely expected through
the coming months as base effects from a year ago begin to take
effect as the sharp declines post-COVID start to fall out of the
annual calculations," said MUFG analysts.
They said the dollar's fortunes could well "remain linked to
10-year yields".
The benchmark 10-year Treasury yield US10YT=RR was at
1.6462% after dropping to as low as 1.6170% last week. It had
surged to a more than a one-year high of 1.7760% on March 30.
The dollar index, which measures the greenback against a
basket of currencies, rose 0.1% to 92.275 =USD while the euro
dropped 0.2% to $1.1875 EUR=EBS .
Bitcoin BTC=BTSP traded above $60,000, closing the gap to
its record high.
Against the pound the dollar initially gained before
reversing course. The British currency was last up 0.2% at
$1.3734 after briefly touching a two-month low of $1.3669
GBP=D3 .
The dollar fell 0.2% to 109.41 yen JPY= versus the
Japanese currency.
"USD has some upside potential this week," Commonwealth Bank
of Australia strategist Kimberley Mundy wrote in a report.
"Strong U.S. economic data will highlight the divergence
between the U.S.'s fast economic recovery and the more stunted
recoveries in other developed economies."
The dollar can lift back toward 110 yen, while the euro has
scope to retrace most of the recent gains from its almost
five-month low near $1.17, she said.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
World FX rates https://tmsnrt.rs/2RBWI5E
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>