* Dollar struggles after Wall Street stocks slide
* Weak stocks pressure dollar by driving down U.S. yields
* Euro hovers near 7-week high vs dollar
By Shinichi Saoshiro
TOKYO, March 22 The dollar struggled at a
four-month low against the yen early on Wednesday after a slide
in Wall Street stocks sent U.S. Treasury yields sharply lower,
eroding the greenback's interest rate allure.
The U.S. currency was off 0.2 percent at 111.56 yen
after plumbing 111.43, its lowest since Nov. 28.
The dollar also nursed large losses against the euro. The
common currency was steady at $1.0810 after surging
overnight to $1.0819, its highest since early February.
"A key factor behind the latest currency developments was
the big drop in U.S. equities. The question now is whether
equities will keep falling," said Shin Kadota, senior strategist
at Barclays in Tokyo.
"Unlike the dollar and treasuries, the 'Trump trade' still
had an impact on equities. But if such impact on equities is to
fade, it would weigh on dollar/yen. The dollar will also suffer
against other currencies as U.S. yields would decline."
Wall Street fell sharply on Tuesday as investors worried
that President Donald Trump will struggle to deliver promised
tax cuts that propelled the market to record highs in recent
months, with nervousness deepening ahead of a key healthcare
vote. The Dow lost 1.1 percent and Nasdaq shed
The dollar index against a basket of major currencies was a
shade lower at 99.707 after retreating to a 1-1/2-month
low of 99.642 overnight.
The greenback has faced a confluence of negative factors
recently, with the dollar index pulling sharply back from a peak
above 102.00 scaled at the start of March.
Dollar bulls were disappointed as the Federal Reserve hiked
interest rates earlier this month but did not signal a faster
pace of tightening to come as many had anticipated.
The U.S. currency has also felt the pressure from a
Growing expectations of a tightening in European Central
Bank monetary policy this year and the possibility of anti-euro
candidate Marine Le Pen being defeated in the French
presidential elections have supported the common currency.
The euro rose above $1.080 for the first time in six weeks
on Tuesday after centrist Emmanuel Macron's performance in a TV
debate fuelled expectations he would win the French presidency
ahead of Le Pen in May.
The pound hovered near a three-week peak of $1.2495
scaled overnight on data showing British inflation jumping above
the Bank of England's 2 percent target for the first time since
The Australian dollar was down 0.2 percent at $0.7672
, having lost steam after rising to a four-month high of
$0.7748 at the start of the week. The wobbly U.S. dollar and
higher commodity prices have benefited the Aussie.
(Editing by Sam Holmes)