* U.S. dollar rises vs Japanese yen, flat vs euro
* Euro off four-week lows but ECB dovish bias to check gains
NEW YORK, June 27 The dollar rose against the
yen, but traded little changed against the euro on Thursday
after U.S. data mostly indicated the Federal Reserve has time
before it slows its efforts to stimulate the U.S. economy, a
sentiment echoed by Fed officials.
The dollar has benefited from a rise in U.S. yields as more
investors price in the probability the Fed will start to wind
down its $85 billion monthly asset purchase program later this
That scenario gained credibility last week when Federal
Reserve Chairman Ben Bernanke said the U.S. economy was
expanding enough for the central bank to begin slowing the pace
of its bond-buying stimulus later this year.
"Since last Wednesday when the Federal Reserve announced its
intention to have fully tapered QE3 by mid-2014 - likely June -
asset classes around the globe have been roiled by indecision
given the sweeping implications of any Fed wind down and its
impact on interest rates," said Christopher Vecchio, currency
analyst at DailyFX in New York.
But Thursday's data was not strong enough to bring forward
investor expectations for the timing of the official end to this
round of quantitative easing. U.S. consumer spending rebounded
in May and new applications for unemployment benefits fell last
week, suggesting the economy remains on a moderate growth path.
The influential head of the New York Fed, William Dudley,
said on Thursday the U.S. central bank's asset purchases could
be more aggressive than Bernanke outlined last week if economic
growth and the labor market turn out weaker than expected.
Meanwhile, Fed Board Governor Jerome Powell said financial
markets have overreacted to the Federal Reserve's statements and
have brought expectations of the first Fed rate hike too far
The dollar was bid as U.S. Treasury yields rose after data
showed pending home sales data for May rose 6.7 percent, far
above economists' estimates of a 1 percent gain but that was not
enough to alter the overall theme for currency trading.
The dollar last traded up 0.7 percent at 98.39 yen,
edging toward Monday's peak of 98.70 yen. But traders said its
rise could be capped on large sell orders above 98.70 yen.
The euro was near flat at $1.3015, with the low at
The dollar index, which measures the U.S. currency against a
basket of currencies, edged up 0.1 percent to 83.068,
after touching a three-week high of 83.171. It was the seventh
straight gain for the index.
The broad trend for dollar strength in the coming months
will hinge upon expectations of reduced Fed stimulus, said
Asmara Jamaleh, an economist at Intesa Sanpaolo in Milan. U.S.
data this week and next week could see the dollar drop if it
lags forecasts, but any falls would provide a buying
opportunity, she said.
Sterling fell to a trough of $1.5200 on Thursday, its
lowest in more than three weeks, after an unexpected downward
revision to UK year-on-year first-quarter growth.
Analysts were a bit more bleak on the euro's outlook after
it closed below its 200-day moving average at $1.3073 and
European Central Bank officials said the ECB was not ready to
wind down stimulus.
The euro/dollar formed a so-called death cross with the
100-day simple moving average at $1.3071, now below the 200-day
SMA at $1.3072.
A death cross occurs when the shorter-term moving average
drops below a longer-term term moving average.
With the 50-day SMA at $1.3077, it is probable that there
will be both a second and third occurrence of a death cross in
coming days when that SMA moves below both the 100-day and
200-day simple moving averages.
"We are bullish on the dollar, while the euro is expected to
weaken as some of the comments from ECB policymakers have been
fairly dovish," said Tom Levinson, currency analyst at ING In