FOREX-Dollar headed for second month of gains vs euro
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* Dollar headed to second month of gains vs euro
* U.S. personal income rose 0.2 percent in April
* German retail sales unexpectedly fell
NEW YORK, May 30 (Reuters) - The dollar was headed for a second month of gains versus the euro and traded near a three-month high against the yen on Friday as easing oil prices and tame inflation data boosted demand for U.S. assets.
A government report on Friday showed U.S. personal spending rose in April in line with forecasts and a key measure of inflation moderated. For details see [ID:nN29395887].
In contrast, Euro zone inflation rebounded to its historic peak of 3.6 percent in May, data showed on Friday, while German retail sales unexpectedly fell for the second month in a row in April.
The dollar also garnered broad support this week from a further retreat in oil prices from last week's record $135.09 per barrel CLc1 and a jump in U.S. Treasury yields US10YT=RR.
"The personal income and spending report fits in nicely with recent data reflecting a bottom has been put in for the dollar," said Michael Woolfolk, senior currency strategist at Bank of New York Mellon in New York. "The focus right now is also on oil prices."
In morning trading in New York, the euro was slightly lower, or 0.1 percent on the day, at $1.5503 EUR=. The euro zone common currency was headed for a second month of declines versus the greenback, according to Reuters data.
European Central Bank President Jean-Claude Trichet in an interview published on Friday said that the central bank will do everything it can to preserve price stability and reinforce expectations of low inflation [IDnL3020162].
"The euro is no different to many other currencies -- stuck between a rock and a hard place with slowing growth and rising inflation," said JP Morgan G10 strategist Kamal Sharma in London.
"Inflation is likely to remain above the ECB's target in the near term. But against the backdrop of slowing growth ... the ECB is unlikely to pull the trigger on rate hikes through the rest of the year."
The dollar index, which tracks the value of the greenback against a basket of six currencies, rose 0.2 percent to 73.120 .DXY. Against the yen, the dollar was 0.15 percent higher on the day at 105.67 yen JPY=, near a three-month high of 105.87 hit in Thursday.
Oil prices fell below $125 per barrel from a record high of $135.09 hit last week but rebounded to be around $128. Moves in oil prices are seen as key for the dollar as a recent surge has fanned fears about the ability of U.S. consumers and businesses to weather the credit- and housing market-led downturn. (Additional reporting by Nick Olivari in New York and Veronica Brown in London; Editing by James Dalgleish)
