(Recasts, updates prices, adds quote, changes byline, dateline; previous LONDON)
* Dollar rises after three days of losses vs yen
* Swedish crown hit by signs central bank to cut rates
* Dealers say central bank reserve moves supporting euro
By Gertrude Chavez-Dreyfuss
NEW YORK, April 9 (Reuters) - The dollar rebounded from one of its worst performances against the yen on Wednesday as the outlook for the greenback brightened on expectations for stronger economic data given better U.S. weather conditions.
The dollar on Tuesday posted its largest one-day fall versus the yen in more than seven months, with investors buying back the Japanese currency after the Bank of Japan held off on additional monetary easing. The greenback’s bounce was the first in four days.
“Our view going into 2014 is broad-based dollar rally predicated on the acceleration of the U.S. economy and rising U.S. rates,” said Mark McCormick, currency strategist, at Credit Agricole in New York.
“A lot of that has been on the back burner given the murkiness of U.S. data due to the weather impact. But we expect that to change and in fact, we’re already starting to see pockets of strength in some of the leading indicators and some of the survey-based measures.”
After hitting lows of 101.52 yen in U.S. trade on Tuesday, the dollar recovered to trade 0.1 percent higher at 101.94 on Wednesday. The euro was also up 0.2 percent at 140.76 .
Investors are also focusing on the minutes of the latest Federal Reserve meeting to be released on Wednesday. They are likely to show that members of the Federal Open Market Committee generally agreed on tapering the Fed’s bond-buying program.
Analysts will also look for clues about the interest rate cycle given mixed signals from several recent Fed speakers. Chicago Fed President Charles Evans, a well known non-voting dove, suggested on Tuesday that with low inflation in the United States and globally, one of the biggest risks is prematurely withdrawing from an accommodative policy.
On the other hand, Philadelphia Fed President Charles Plosser, a voting hawk, had suggested that quantitative easing is not the answer to low inflation.
The Swedish crown, meanwhile, was one of the biggest movers on Wednesday, falling versus the euro, after the Riksbank signalled it was moving closer to cutting interest rates.
Dealers from Scandinavian banks said the central bank’s lowering of its projected path for rates opened the way to a push towards 9.05 crowns per euro, although there would be some caution ahead of inflation numbers due on Thursday.
The euro rose 0.4 percent against the Swedish crown to 8.978 .
One striking trend on the majors since last week is the euro’s resilience in the face of signals from the European Central Bank that it is prepared to consider outright money printing to support growth if need be.
A number of dealers said the euro zone common currency was being supported by China’s need to re-order the balance of currencies it holds in its reserves after buying billions of dollars last month to weaken the yuan. Similarly, many pointed to signs of intervention by South Korean authorities overnight that may support the euro.
The refloating of the euro zone’s struggling southern states on bond markets, exemplified on Wednesday by Greece’s announcement of its first bond sale in four years, has also drawn capital back into Europe this year.
“A lot of people thought the euro would go lower (after the ECB last week), then it didn‘t,” said Graham Davidson, a currency trader with NAB in London.
“I think there are two reasons for that: the euro is still supported by a solid trade surplus and there have been some signs of reserve diversification by a number of central banks.”
The euro was up 0.1 percent against the dollar at $1.3814, and firmly in the upper half of its recent range. (Additional reporting by Patrick Graham in London; Editing by James Dalgleish)