LONDON, May 30 (Reuters) - The dollar fell slightly on Thursday as U.S. Treasury yields stabilised, after the currency rose to a two-week high the previous day amid easing bets on Federal Reserve interest rate cuts.
The index tracking the U.S. currency against its major peers climbed to 105.18 overnight, the highest since May 14, but was last down 0.25% at 104.87.
A two-day, 15-basis point jump above 4.6% for long-term Treasury yields helped push the dollar higher on Wednesday by boosting the attractiveness of U.S. debt. Yet, yields were last down around 3 basis points at 4.594% on Thursday.
The rise in yields, which move inversely to prices, has been driven by a spate of stronger-than-expected data, hawkish comments from Federal Reserve officials, and a run of poorly received bond auctions.
The euro was up 0.2% at $1.082 after dropping 0.5% on Wednesday to touch a two-week low of $1.0789 overnight.
"People will today be keeping an eye on the bond market to see if there's any further selloff," said Chris Turner, head of global markets at ING. He said the solid demand for a Japanese government bond auction likely helped steady global debt on Thursday.
"It's going to need some big new input to break euro-dollar out of recent ranges. So by recent standards yesterday's 0.5% move was quite large."
The dollar was down 0.6% against the Japanese yen at 156.71 after hitting a one-month high of 157.72 the previous day.
Charu Chanana, head of FX strategy at Saxo Bank, said traders may be nervous about nearing the 158 level with the threat of intervention by Japanese authorities looming in the background.
Market players suspect Japan intervened to prop up its currency at the end of April and early May, which may be confirmed by data out on Friday.
"Japanese authorities intervened near this level on May 1, and the market now views 158 as a critical point for potential intervention," Chanana said.
Sterling rose 0.1% to $1.2714 after also falling 0.5% on Wednesday.
The Swiss franc rose around 0.7%, with HSBC analysts pointing to the Swiss National Bank saying it could intervene to boost the currency if a weaker currency causes imported inflation to rise.
Expectations for Federal Reserve interest rate reductions this year have been pared back amid signs of sticky inflation, most recently with a surprise uptick in consumer sentiment in data on Tuesday.
Traders currently see around 55% odds of a quarter-point cut by the conclusion of the September meeting, down from 57.5% odds a week ago, according to the CME Group's FedWatch Tool.
Revised U.S. GDP figures are due later in the day, followed on Friday by the main macro event of this week, the release of the Personal Consumption Expenditures price index - the Fed's preferred measure of inflation.
Price data for the euro zone is also due on Friday, following a stronger-than-expected April inflation reading for Germany on Wednesday.
Reporting by Harry Robertson in London and additional reporting by Kevin Buckland in Tokyo; Editing by Shri Navaratnam, David Holmes and Sriraj Kalluvila
