FOREX-Dollar off recent highs as investors look to Fed, Yellen for bond clues

* Dollar off recent highs; market looks to Powell, Yellen
* Turkish lira steadies after tumble on Monday
* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E

By Hideyuki Sano
TOKYO, March 23 (Reuters) - The U.S. dollar hovered below
recent highs on Tuesday as investors looked to fresh comments
from top U.S. policy makers to gauge how far they would allow
U.S. bond yields to rise.
The Turkish lira showed some sign of stability following a
7.5% dive on Monday after President Tayyip Erdogan sacked a
hawkish central bank chief. The dollar traded at 108.81 yen JPY= , having lost a bit of
steam after it had hit a nine-month peak of 109.365 last week.
The euro stood at $1.1934 EUR= , having bounced off a two-week
low of $1.1870 on Monday.
The dollar's index =USD against a basket of six major
currencies slipped 0.32% on Monday and stood almost flat in
early Asian trade at 91.815.
The index has gained 2.0% so far this quarter, as speedy
rollouts of COVID-19 vaccines in the United States and the Biden
Administration's $1.9 stimulus are seen lifting the country's
economic growth, helping to drive up U.S. bond yields and
drawing investors to the dollar.
The dollar's attraction was further boosted as U.S. Federal
Reserve officials appeared to tolerate rises in bond yields in
recent weeks.
"U.S. bond yields could rise further as the market may try
to find out where the pain threshold for the Fed is," said
Minori Uchida, chief currency analyst at MUFG Bank.
The immediate focus is on the Congressional testimony by
Federal Reserve Chair Jerome Powell and Treasury Secretary Janet
Yellen later today.
For now, though, the 10-year U.S. bond yields eased to
1.684% US10YT=RR after peaking at 1.754% on Thursday, keeping
the dollar in check.
"The market is interested in how far U.S. bond yields will
rise. While top Fed officials have said they will keep interest
rates low through 2023, there could be dissenting voices," said
Yukio Ishizuki, senior strategist at Daiwa Securities.
The Turkish lira traded at 7.7980 per dollar TRYTOM=D3
after a steep fall on Monday to as low as 8.485, near its record
low of 8.58.
The lira's massive fall, however, did little to shake
investors' confidence in emerging market currencies as the
event, the third firing of a central bank chief by Erdogan since
2019, was not perceived to hold wider risk.
The MSCI emerging market currency index .MIEM00000CUS
dipped only slightly on Monday.
Bitcoin stood at $54,549 BTC=BTSP , having fallen almost 5%
on Monday to trade near last week's low of $53,221.

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