FXOUTLOOK-US dollar likely to remain under pressure next week

* US dollar likely to remain under pressure

* US dollar falls against yen for five straight weeks

* U.S. August CPI data a focus for investors next week

By Nick Olivari

NEW YORK, Sept 11 (Reuters) - The U.S. dollar is likely to remain under pressure in the week ahead with investors reluctant to make big bets in favor of the greenback until the U.S. economy shows significant improvement, analysts said.

Though there is evidence that the U.S. economy is recovering which may prompt investors to buy the dollar on expectations of better returns in U.S. assets, for now investors are still trading on changes in risk tolerance.

After months of buying the dollar as a safe haven play, investors have been conditioned to buy the greenback when risk aversion rises and sell and diversify into assets in other currencies as confidence in the world economy improves. Strong Chinese data on Friday added to risk tolerance [ID:nPEK13979] at the end of this week.

"When risk goes down, people flood out of the dollar assets they bought when they panicked," said Joseph Trevisani, senior market analyst at FX Solutions in Saddle River, New Jersey. "The euro is in a steady uptrend with no change in outlook for the U.S. economy. The U.S. data is only a little better."

For the week, the dollar fell 2.4 percent against the yen JPY=, its fifth straight weekly decline. It has fallen 7.0 percent in the last five weeks, according to Reuters data.

The low-yielding yen is considered even more of a safe haven play than the dollar.

The euro EUR= rose 2.2 percent against the dollar, its best week since the week ending May 24, at current prices.

The U.S. dollar index .DXY, the dollar against a basket of six currencies, fell 2.0 percent for the week, it's second straight week of declines and is hovering around its lowest level in a year.

The index has declined for six straight days for the first time since March.

U.S. CPI DUE

A slew of data will greet foreign exchange investors next week but investors may pay particular attention to consumer inflation data, said Ashraf Laidi, chief markets strategist at CMC Markets in London, for clues on on when the U.S. Federal Reserve may end quantitative easing.

After cutting their domestic interest rates, central banks around the world effectively printed money to support their economies by among other actions, buying their own government governments' notes, a process known as quantitative easing.

"If we get any weakness in the CPI that will reinforce that disinflation remains the risk and keep any talk of an exit strategy (from quantitative easing) at bay," said Laidi.

"A looming exit strategy is only positive (for the dollar) if formed by positive data, not inflation."

The end of "QE" would be an acknowledgement by the Fed the economy was functioning by itself and make U.S. assets overall attractive to investors, thereby stoking demand for the dollars to buy them.

The consumer price index for August will be released on Wednesday and is forecast to rise 0.3 percent in the overall number and up 0.1 percent excluding food and energy.

Other upcoming U.S. data releases include the producer price index for August on Tuesday, which is expected to rise 0.8 percent from the prior month in the headline number and 0.1 percent excluding food and energy.

The same data will see the release of August retail sales data which is forecast to rise 1.9 percent overall and 0.3 percent excluding automobile sales.

As well as the CPI report, a report on the current account for the second quarter slated for release on Wednesday is expected to show a deficit of $92.0 billion.

Late the same day a report on Treasury International Capital flows (TICS) for July will be released, followed by a separate report on Industrial output for August. Industrial output is expected to rise 0.6 percent month over month.

Thursday will conclude the first-tier data releases for the week with housing starts for August, weekly initial jobless claims and the Philadelphia Fed index for September.

Housing starts are forecast to post at 600,000 for the month on an annualized basis and the Philadelphia Fed index to post at 8.0. (Reporting by Nick Olivari)