FOREX-Dollar near two-week lows as investors await Fed minutes

* Euro higher euro zone data supports
* Aussie, Kiwi dollar slip

(Updates prices, market activity, comments to U.S. market open;
changes dateline, previous LONDON)
By Saqib Iqbal Ahmed and Elizabeth Howcroft
NEW YORK, April 7 (Reuters) - The U.S. dollar hovered near a
two-week low against a basket of currencies on Wednesday, as
profit-taking and weakness in U.S. yields exerted pressure.
Market participants were hesitant to place big directional
bets ahead of the Federal Reserve's meeting minutes later in the
day, and the dollar traded little-changed against most of the
majors.
The U.S. Dollar Currency Index =USD , which measures the
greenback against a basket of six currencies, was 0.101% lower
at 92.213.
The dollar has appreciated this year along with Treasury
yields as investors bet the United States would recover more
quickly from the COVID-19 pandemic than other developed nations.
But the dollar index's 2.5% gain in March, the biggest
monthly increase since the end of 2016, prompted some traders to
book profits, analysts said. The weakness in Treasury yields
after their rapid rally this year also added pressure on the
dollar.
All of this has left investors wondering if the dollar
weakness, which sent the currency to a near 3-year low earlier
this year, may be set to resume.
"I don't think it is necessarily time to say the USD is in a
downward trend, but rather some of the support it had been
seeing has faded to a degree," Stuart Cole, chief macro
strategist at Equiti Capital in London, said.
Upbeat European data on Wednesday showing euro zone business
activity bounced back to growth last month, also supported the
common currency against the greenback. EUR=EBS Market participants await the release of Fed meeting minutes
later in the session for hints about the Fed policymakers' views
on rising yields.
"Investors will be scanning the minutes in search of any
'discomfort' among policymakers about rising inflation prospects
and in parallel any hint that the discussion is migrating
towards defining a timeline for tapering asset purchases," ING
strategists wrote in a note.
"Any (even mild) hawkish signal surely bears the risk of
hitting Treasuries, and providing some support to the dollar."
The Australian dollar fell against the dollar, down 0.4%
AUD=D3 , while the New Zealand dollar was down 0.38% NZD=D3 ,
both pausing their upward trajectory of the last two weeks.
The Canadian dollar also fell, hurt by a third wave of the
COVID-19 pandemic in the country. Sterling sank on Wednesday as profit-taking by traders after
a strong first quarter for the British currency pulled it to a
week's low against the dollar and its lowest in two weeks
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World FX rates https://tmsnrt.rs/2RBWI5E
The lull after the storm https://tmsnrt.rs/3cYBCLU
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