FOREX-Dollar steadies after Monday's drop; euro struggles near $1.18

* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E

By Saikat Chatterjee
LONDON, April 6 (Reuters) - The dollar steadied on Tuesday
after posting its biggest drop in three weeks during the
previous session as investors consolidated positions following a
recent rally.
The dollar has risen this year, along with Treasury yields,
as investors bet the United States would recover faster from the
pandemic than other developed nations, amid massive stimulus
and aggressive vaccinations. At 2.5%, March's was the biggest
monthly gain for the dollar since the end of 2016.
But April got off to a weak start for the dollar as hedge
funds cut their long positions, despite Friday's
stronger-than-expected monthly payrolls data.
The dollar index =USD sank as low as 92.527 in Asia, its
weakest since March 25. The U-turn comes less than a week after
it hit an almost five-month top at 93.439.
In early London trading, the dollar =USD advanced 0.14% to
92.70. On Monday, it fell 0.43%, its biggest single-day drop
since March. 17, according to Refinitiv data.
Commerzbank strategists said the latest weakness in the
dollar is a sign that the U.S. reflationary advantage versus
other major economies is running out of steam and more evidence
is required for the dollar to rise higher.
Benchmark 10-year Treasury yields US10YT=RR extended their
retreat on Tuesday, dipping below 1.7% early in early London
trading from a peak of 1.776% last week - a level not seen since
January of last year.
"The USD level has now outstripped the pickup in non-U.S.
growth expectations," meaning "there's room for a USD pause" in
its recent uptrend, Mark McCormick, the global head of
foreign-exchange strategy at TD Securities, wrote in a client
note.
The pause in the dollar's drop also undercut the euro's
advances. It struggled to hold above $1.18, with pandemic-linked
activity casting a shadow over the near-term economic outlook.
Elsewhere, the Australian dollar AUD=D3 , considered a
proxy for risk appetite, slipped to $0.76415 on Tuesday, after
rallying 0.8% to start the week. The Reserve Bank of Australia
left policy unchanged on Tuesday, as expected. The cryptocurrency market capitalization reached a peak of
$2 trillion on Monday, according to data and market trackers
CoinGecko and Blockfolio. Gains over recent months attracted
demand from both institutional and retail investors.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
World FX rates https://tmsnrt.rs/2RBWI5E
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>