FOREX-Dollar hits two-week lows, Swedish crown hits 1-month high vs. euro

* Dollar at two-week lows

* Sterling crosses $1.38

* Graphic: World FX rates

LONDON, (Reuters) - The dollar wallowed near two-week lows on Wednesday as demand for safer assets ebbed, while Sweden’s crown hit its highest levels in a month against the euro.

Bitcoin consolidated around $46,500 after reaching a new high of $48,216 overnight following Tesla’s disclosure of a $1.5 billion investment in the leading cryptocurrency.

Rival virtual currency ethereum, which often moves in tandem with bitcoin, reached a record $1,826 on Wednesday before pulling back slightly. It was trading 1.1% higher at $1,791.

Sweden’s crown strengthened to a two-month high of 10.0405 crowns per euro ahead of the Swedish central bank’s interest rate decision, paring some of those gains after the bank kept monetary policy unchanged on Wednesday as expected.

The dollar index drifted to a two-week low of 90.299 on Wednesday for the first time this month and set for a third day of losses.

Traditionally viewed as a safe-haven, the dollar has sunk against major peers as optimism over monetary and fiscal support, robust corporate earnings and coronavirus vaccines bolstered risk sentiment.

U.S. consumer price inflation numbers for January are due at 1330 GMT, and along with a speech by Federal Reserve Chair Jerome Powell will be key events for the future direction of the dollar.

“The mix of clear upside price pressures, the risk of an overshoot and CPI staying higher for longer, along with a cautious Fed sticking to its Average Inflation Targeting framework to make up for past inflation undershoots, should lead to a lower USD as U.S. real rates remain deeply negative,” said ING strategists in a note to clients.

There has been a tug-of-war among traders over the impact on the dollar of President Joe Biden’s planned $1.9 trillion fiscal stimulus package.

On one hand, it is expected to speed a U.S. recovery relative to other countries, bolstering the currency. But on the other, it is a major driver in a global reflation narrative that should lift riskier assets at the dollar’s expense.

After a strong start to the year for the greenback, the latter view appears to be regaining sway with last week’s U.S. jobs data providing the turning point, according to Westpac analysts.

“Friday’s disappointing payrolls completely flattened the USD, that data point casting doubt on the budding U.S. outperformance narrative and refocusing minds on the prospect for sustained reflationary U.S. fiscal and monetary policy,” they wrote in a client note on Wednesday.

“Nursing eye-catching losses, a test of 90 on the cards in coming days,” the note said, referring to the dollar index.

The dollar lost 0.1% to 104.42 yen, with the Japanese currency hitting its highest against the greenback since Jan. 29.

The euro edged up to $1.2142, adding to a three-day gain and hitting its highest since the start of February.

The British pound set fresh three-year highs of $1.3853.

Reporting by Ritvik Carvalho; additional reporting by Kevin Buckland in Tokyo; Editing by Kim Coghill