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* Dollar on track for best one-day gain since mid-December
* Euro hit by French election fears
* Technical buying also boosts dollar
By Gertrude Chavez-Dreyfuss
NEW YORK, Feb 7 (Reuters) - The dollar climbed to a more than one-week high on Tuesday as it gained for a fifth straight session, bolstered by technical buying after recent losses, as well as political uncertainty in Europe with a slew of elections this year.
The greenback was on track to post it best one-day gain since mid-December, rising at the expense of the euro, which has struggled on renewed worries about Greece’s debt problems and signs that far-right candidate Marine Le Pen is gaining momentum before France’s presidential election.
“The dollar is benefiting from mounting political uncertainty ahead of a number of crucial elections in the euro zone and from buying by bargain-hunters, looking to pick up the greenback following its worst start to the year in 30 years,” said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.
Elections in the Netherlands, Germany and possibly Italy, more wrangling over Greece’s bailout and an upcoming reduction in the European Central Bank’s monthly bond-buying are all playing on investor nerves, analysts said.
In morning trade, the dollar index rose 0.6 percent to 100.53, recovering from its worst January performance since 1987. It also gained 0.6 percent against the yen to 112.39 .
The dollar’s gains accelerated after China reported its foreign exchange reserves unexpectedly fell below the $3 trillion level in January for the first time in nearly six years.
The euro, meanwhile, fell 0.7 percent to $1.0677, on pace for its worst daily performance in about three weeks.
France’s tightly contested presidential race sank deeper into smear and sleaze on Tuesday after centrist Emmanuel Macron was forced to deny an extramarital affair and as scandal continued to dog conservative Francois Fillon and his party.
“All in all it’s been a virtuous tailwind for the U.S. dollar this morning and there is also fear of capital flight (from China) which is feeding safe-haven flows,” said Jeremy Stretch, head of currency strategy at CIBC in London.
Widespread predictions late last year that the U.S. currency would gain in early 2017 have been upset by a combination of worries about President Donald Trump’s protectionist bent and the global implications of his approach to geopolitics,
“Until we have answers to some of the big (policy) questions I can’t see any free space for dollar bulls to run into. They are fearful of what the administration is prepared to do to actually keep a lid on the dollar,” said Neil Mellor, senior currency strategist with Bank of New York Mellon in London.
Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by John Geddie and Patrick Graham in London; Editing by Dan Grebler