FOREX-Dollar pins hopes on Fed, Biden to end month-long slump

* Rising inflation expectations push up U.S. yields again

* Australian dollar falls after soft consumer price data

* Yen at multi-year low vs euro, franc; BOJ seen far from tapering

* Cryptocurrency ether pushes to record high above $2,700

* Graphic: World FX rates

TOKYO, April 28 (Reuters) - The dollar ticked up on Wednesday as it eyed the U.S. Federal Reserve’s policy statement and a speech by President Joe Biden later in the day for direction, seeking to extend a recovery after a one-month slump.

The dollar index stood at 91.004, bouncing from Monday’s low of 90.679, its weakest level since March 3, though investors were not convinced a recent downtrend had ended.

“The backdrop for the (dollar index) is an unappetising one,” Westpac strategists wrote in a note, predicting the gauge will drop toward 90 this week.

The greenback’s decline stemmed largely from receding bets that the Federal Reserve could start laying the ground work for future policy tightening soon as the U.S. economy rapidly recovers.

On Wednesday, the U.S. central bank is widely expected to maintain its policy settings and Fed Chairman Jerome Powell is seen as likely to repeat his dovish message.

But some analysts say signs of rising inflation expectations could nudge the Fed to abandon its rhetoric that a policy tightening is still a long way off.

Investors’ inflation expectations, measured by the break-even inflation (BEI) rate calculated from U.S. inflation-linked bonds, rose above 2.40% on Tuesday, the highest level since 2013.

“In a way, the rise in the BEI above 2% is what the Fed has been wishing for. Still, if it goes too far it could raise alarm at the Fed. The Fed will probably not be able to overlook a rise in BEI above 2.5%,” said Makoto Noji, chief FX strategist at SMBC Nikko Securities.

The Federal Reserve said last year it aims to bring average inflation to around 2% and to allow it to overshoot above 2%, rather than trying to cap it around 2%.

The euro slipped 0.2% to $1.2073, off Monday’s two-month high of $1.2117.

The dollar stood at 108.855 yen, having jumped 0.59% overnight and extending its recovery from a seven-week low of 107.48 touched last week, in tandem with rises in U.S. bond yields.

The yen was on the back foot as Japan’s economic recovery is being hampered by recent surges in COVID-19 cases and after the Bank of Japan acknowledged that inflation will fail to reach its key 2% target through early 2023.

“When you look around, the Bank of Canada already started tapering. The Bank of England could come next. The ECB (European Central Bank) might drop a hint of tapering in June. And we will hear from the Fed today. Compared with all that, there’s a sense that the BOJ is quite behind,” said Jun Arachi, forex strategist at Rakuten Securities.

The Japanese currency slipped even against low-yielding European currencies, hitting a 2-1/2-year low versus the euro, at 131.57 per euro and a five-year low on the Swiss franc, at 119.08 per franc.

Besides the Fed, investors are looking to President Biden’s first address to a joint session of Congress, also scheduled later on Wednesday.

Biden is expected to roll out a plan to raise taxes on the wealthiest Americans, including the largest-ever increase in levies on investment gains, to fund about $1 trillion in childcare.

News reports about his tax hike plan dented markets’ risk appetite only briefly on Friday, but analysts think there could be a bigger reaction if the plan becomes more concrete.

“In addition to tax policies that have resurfaced as a market focus, his stance on diplomacy should attract some attention given recent tensions with China and Russia,” said Shinichiro Kadota, senior strategist at Barclays.

Elsewhere, the Australian dollar dropped 0.3% to $0.77415 after the country’s consumer price index came in weaker than expected.

In cryptocurrencies, ether hit a record high of $2,719.47 on Wednesday before retreating to last trade 0.9% lower at $2,596.40.

Bigger rival bitcoin traded as high as $55,809.86, extending its rebound from a 7 1/2-week trough of $47,004.20 hit on Sunday.

Reporting by Hideyuki Sano; Editing by Muralikumar Anantharaman, Kim Coghill and Ana Nicolaci da Costa