* Dollar edges down from 3-year highs, tracks dip in U.S.
* Dollar tipped for more gains on Fed stimulus scaleback,
* Euro supported by Greek aid disbursement
By Anooja Debnath
LONDON, July 9 The dollar tracked U.S. treasury
yields down from multi-year highs on Tuesday, but investors
anticipated more gains for the currency as the U.S. economy
picks up and its central bank scales back monetary stimulus.
Expectations the Federal Reserve, which releases minutes of
its June meeting on Wednesday, will reduce its bond-buying as
early as September should keep the dollar buoyant, with
strategists saying its rapid recent ascent could see some
corrections now but buyers would emerge at lower levels.
The dollar index, which measures the U.S. currency's value
against a basket of currencies, was down 0.1 percent at 84.186
, closely tracking a dip in U.S. treasury yields
from a near two-year high of 2.755 percent reached
Also on Monday, the dollar index touched a three-year peak
of 84.588 following Friday's upbeat U.S. jobs report.
Likely modest declines in the dollar in coming days "will
provide a renewed buying opportunity as the overall picture is
positive for the dollar," said Ian Stannard, head of European FX
strategy at Morgan Stanley.
He said Wednesday's FOMC minutes would be scrutinised for
any hints monetary stimulus could be tapered soon, which would
support the dollar.
The euro was flat at $1.2873, staying above the
seven-week trough of $1.2806 hit on Friday. The single currency
found some support after Greece was aid that will prevent it
from defaulting on debt in August.
But with the Fed poised to unwind its stimulus, while the
European Central Bank looks set to keep interest rates at record
lows, the euro is likely to remain under pressure.
"Whatever the short-term price fluctuations... this monetary
policy divergence will drive euro lower over the medium term,"
analysts at Societe Generale said adding that they were short
euro versus the dollar, sterling and the Norwegian crown.
The dollar is also expected to rise against the yen and
sterling as the Bank of Japan is expected to continue with its
aggressive monetary stimulus, while the Bank of England has
indicated it was in no hurry to hike rates.
Against the yen, the dollar rose 0.2 percent to 101.17 yen
, off a near six-week high of 101.54 yen on trading
platform EBS hit on Monday.