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* Weak U.S. April auto sales dampen dollar
* Euro gains vs dollar after trading negative
* Dollar pares gains vs yen after touching 112.30 yen
* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh
By Sam Forgione
NEW YORK, May 2 (Reuters) - The U.S. dollar eased off a six-week high against the yen and fell against the euro after weak U.S. April auto sales added to worries that the Federal Reserve may eventually take a more dovish-than-expected view on interest rate increases over the remainder of the year.
No. 1 U.S. automaker GM reported a 6 percent decline in April sales. Sales at Ford, the No. 2 U.S. automaker, fell 7.2 percent in April, while Toyota recorded a drop of 4.4 percent. nL1N1I40OF]
The declines in U.S. new vehicle sales followed data on Monday showing weak U.S. factory activity and inflation and last week’s release of U.S. first-quarter gross domestic product growth, which showed the weakest performance in three years.
“The bigger risk of this autos data is that it reflects a broader slowdown in consumption,” said Thierry Albert Wizman, global interest rates and currencies strategist at Macquarie Ltd in New York.
“It kind of gives a little bit of support to the guys who are saying it’s one more and done,” Wizman said in reference to the possibility of just one more Fed rate hike this year.
The dollar had gained as much as 0.4 percent against the yen to 112.30 yen, its highest since March 21, as risk appetite fueled losses in the safe-haven Japanese currency. The dollar was last just 0.1 percent higher against the yen at 111.97 yen as risk appetite faded.
The euro was last up 0.3 percent against the dollar at $1.0925 after trading negative against the dollar earlier in the session.
Traders were awaiting a policy statement from the Fed at the end of its two-day meeting on Wednesday and Friday’s U.S. April non-farm payrolls report from the U.S. Labor Department. Economists polled by Reuters expect U.S. employers to have added 185,000 jobs last month, up from March’s 98,000.
The Fed is expected to hold interest rates steady at its meeting this week as it pauses to parse more economic data but may hint it is on track for an increase in June.
“If there is a weak (non-farm payrolls reading)...the Fed will start running out of strong arguments for a June rate hike,” said Alfonso Esparza, senior currency strategist at Oanda in Toronto.
The dollar index, which measures the greenback against a basket of six major rivals, was last down 0.1 percent at 98.982.
Reporting by Sam Forgione; additional reporting by Patrick Graham in London; Editing by David Gregorio