* Dollar/yen pops above 113.00 threshold for fist time since Jan
* Powell shows upbeat view on US economy, downplays trade war risk
* Sterling struggles near 3-wk lows vs dollar amid Brexit woes (Adds details and quotes, updates prices)
By Shinichi Saoshiro
TOKYO, July 18 (Reuters) - The dollar rose across the board on Wednesday, climbing to a six-month high against the yen, after Federal Reserve Chairman Jerome Powell gave an upbeat outlook for the U.S. economy and reinforced views that the Fed was on track to steadily hike interest rates.
In closely watched congressional testimony on Tuesday, Powell said he saw the United States on course for years more of steady growth, while largely discounting the risks associated with a trade war.
The dollar was up 0.05 percent at 112.955 yen after going as high as 113.08, its strongest since January 9.
The euro dipped 0.05 percent to $1.1653 after losing 0.4 percent overnight.
An easing of risk aversion was reflected on Wall Street, which rose overnight and supported Asian stocks on Wednesday after Powell’s optimistic analysis of the U.S. economy.
“The dollar stands to gain further, particularly against the yen, with risk aversion in the equity markets petering out,” said Junichi Ishikawa, senior FX strategist at IG Securities in Tokyo.
“And while long-term Treasury yields are not rising prominently, this is a reflection of investor demand for U.S. assets that generates a degree of dollar-buying.”
The 10-year Treasury yield firmed this week but it has been on a steady decline from a seven-year high above 3 percent set in May.
The two-year Treasury yield, most sensitive to the market’s views on changes in Fed policy, has risen to a decade-high.
As a result the U.S. yield curve was the flattest in 11 years and close to inverting, a phenomenon in which the two-year yield becomes higher than the longer-dated Treasury yield.
An inverted yield curve is sometimes seen as a sign of waning confidence towards the economy and a signal for a recession.
“The correlation between the yield curve and the dollar has been relatively unstable. Taking this into account, currencies are unlikely to show a strong reaction if the curve does invert,” said Tohru Sasaki, head of market research at JPMorgan Chase Bank.
The pound was little changed at $1.3110 after slipping 1 percent the previous day.
On top of the dollar’s broad strength, sterling has come also under pressure from disquiet over British politics.
The currency fell to a three-week low of $1.3068 overnight as investors expected more Brexit challenges after Theresa May’s government only narrowly won a parliamentary vote on post-Brexit trade with the European Union.
The dollar index against a basket of six major currencies edged up 0.1 percent to 95.038 after rising roughly 0.5 percent the previous day.
The Australian dollar was a shade lower at $0.7384, extending the retreat from Tuesday when it lost 0.45 percent against a broadly stronger greenback.
Reporting by Shinichi Saoshiro; Editing by Eric Meijer & Shri Navaratnam