Dollar surpasses two-week high as safe haven demand helps

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LONDON, March 23 (Reuters) - The dollar index rose against a basket of most major currencies on Tuesday, surpassing a two-week high, while yields on U.S. Treasuries slippedas U.S. Federal Reserve Chair Jerome Powell told Congress inflation will not get out of hand.

The dollar index was last up 0.65% at 91.8, reversing course from Monday when it dipped but hovered below four-month highs, as investors sought safe havens.

Yields on U.S. Treasuries also slipped again, at 1.624% . Earlier Tuesday, the Treasury drew solid demand for two-year notes, with investors looking ahead to auctions for longer-dated notes later in the week.

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"It’s more about the fundamentals," said Juan Perez, a currency trader and strategist at Tempus Inc. "(We) have a ton of data to digest starting tomorrow."

Perez said the dollar's rise on Tuesday shows "ultimately we're just not out of this thing," referring to the COVID-19 pandemic.

The dollar index has gained around 2.4% so far in 2021 as investors see the relatively quick rollout of COVID-19 vaccines and stimulus spending in the United States as boosting economic growth.

But there was a wary tone in global markets, with most U.S. stocks tumbling on Tuesday.

Contributing to market caution was a third wave of the COVID-19 pandemic in Europe. Germany is extending its lockdown and urging citizens to stay at home over the Easter holidays. read more

Euro-dollar was down 0.71% at $1.1847.

The New Zealand dollar fell on new measures to cool the housing market, dropping to a three-month low against the U.S. dollar .

It was down about 2.27% on the day at 0.70.

The drop was triggered by the New Zealand government introducing measures to curb speculation on its red-hot housing market, where house prices have risen 23% in 12 months.The Australian dollar - considered a liquid proxy for risk - also took a hit and was down 1.54% at 0.763 versus the U.S. dollar .

Turkey's lira stabilized somewhat, having plunged 7.5% on Monday after President Tayyip Erdogan sacked the hawkish central bank chief. It was up around 1.79% against the U.S. dollar.

Currency bid prices at 4:02PM (2002 GMT)

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Reporting by Elizabeth Howcroft

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