* Dollar's jobs-inspired rally runs out of steam
* Euro recovers from brief dip on weak German data
* U.S. yields slip as Wall St looks to earnings for guidance (Updates prices, adds comments)
By Ian Chua and Masayuki Kitano
SYDNEY/SINGAPORE, July 8 The dollar held steady versus a basket of major currencies on Tuesday, having retreated from the previous day's near-two-week high, giving the euro a chance to get over an unexpected slump in German industrial output.
The dollar index was at 80.233, off a 1-1/2-week peak at 80.359 set on Monday. Still, it managed to hold on to most of the gains made in the wake of solid payrolls data on Thursday.
The greenback's lacklustre performance came as U.S. Treasury yields slipped from recent highs after Wall Street turned cautious ahead of the second-quarter earnings season starting this week.
That helped support the euro, which held steady at $1.3605 , having bounced from a low of $1.3576 on Monday when an unexpectedly big fall in German industrial output unsettled the common European currency.
The disappointing data added to mounting signs of a weaker second quarter in Europe's largest economy and fanned expectations the European Central Bank (ECB) may have to loosen monetary policy further in coming months.
The dollar eased 0.1 percent to about 101.82 yen, inching away from a two-week high of 102.27 yen set last Thursday.
The dollar may stay trapped in directionless range-trading versus the yen until around the end of the year, said Masashi Murata, a currency strategist for Brown Brothers Harriman in Tokyo.
"I think the reason for the low volatility is the fact that the outlook for monetary policies in Japan and the United States is very clear," he said.
On the one hand, market expectations of additional monetary easing by the Bank of Japan have receded since Governor Haruhiko Kuroda has shown confidence that the BOJ's inflation target of 2 percent will be achieved, Murata said.
Meanwhile, the Fed is thought likely to continue with its tapering of asset purchases and to start raising interest rates sometime next year, even if there are a range of views at this point about the exact timing of a rate rise, he added.
Low volatility may persist unless investors see economic indicators that cast doubt on such views, Murata said.
The Australian dollar gained a bit of a reprieve, edging up 0.1 percent to $0.9386 and edging away from a two-week low of $0.9327 plumbed last week.
Yet it remained well below a recent high of $0.9505, with markets yet to fully get over the central bank's latest attempt to talk the currency lower.
Moves in major currencies so far this week have been modest, highlighting a lack of conviction in a market still in a summer lull.
Investors are now waiting for more definitive signs that something will happen on the central bank front, said Emma Lawson, senior currency strategist at National Australia Bank in Sydney.
"With many consensus trades over the year having been thwarted, it may take the evidence of change to be overwhelming before participants join and create a trend," Lawson added. (Editing by Richard Pullin and Alan Raybould)