FOREX-Safe-haven dollar in demand as worries over European lockdowns, U.S. taxes sap risk appetite

    * Greenback nears four-month high after Germany extends
    * Yen also strengthens as Yellen defends need for higher
    * Aussie weaker amid flare-up in tensions between West and
    * Graphic: World FX rates

    By Kevin Buckland
    TOKYO, March 24 (Reuters) - The safe-haven U.S. dollar
approached a four-month high on Wednesday as concerns over a
third COVID-19 wave in Europe, potential U.S. tax hikes and
escalating tensions between the West and China sapped risk
    The yen also strengthened and U.S. Treasuries were bid while
Wall Street stocks and crude oil tumbled as investors weighed
the outlook for global growth. 
    The dollar index rose to a two-week high at 92.436 in
the Asian session, approaching a four-month top of 92.506 hit
earlier this month. 
    The gauge "looks determined to test the top end of a new,
higher 91-93 range we think will form in coming weeks," Westpac
strategists wrote in a client note. 
    "Extended European lockdowns have sapped confidence in a
synchronised global rebound; meanwhile, the U.S. will have an
impressive rebound in coming months amid a strong vaccine
roll-out, stimulus payments and economic reopenings," they said.
    The euro edged toward a four-month trough below
$1.18355 - trading as low as $1.18360 - after Germany extended a
lockdown and urged its citizens to stay at home during the
Easter holiday.
    Worries over the pace of the pandemic recovery were
heightened after a U.S. health agency said the AstraZeneca Plc
 vaccine may have included outdated information in its
    The flight to safety received an additional nudge when
Treasury Secretary Janet Yellen told lawmakers that future tax
hikes will be needed to pay for infrastructure projects and
other public investments. 
    Yellen was testifying to the House Financial Services
Committee along with Federal Reserve Chair Jerome Powell, who
reiterated that an expected near-term spike in inflation will be
    That helped tame U.S. Treasury yields, with the benchmark
 sinking below 1.6% on Wednesday for the first time
in a week, as it continued its retreat from a more than one-year
high of 1.7540% touched last week. 
    Both Yellen and Powell are also scheduled to testify to the
Senate Banking Panel on Wednesday. 
    Human rights sanctions on China imposed by the United
States, Europe and Britain, which prompted retaliatory sanctions
from Beijing, are adding to market concerns.
    The safe-haven yen was broadly stronger, and
Australia's dollar - considered a liquid proxy for risk -
 weakened further on Wednesday. 
    The Aussie slipped to as low as $0.7595, a level not seen
since Feb. 5, and to 82.41 yen for the first time
since the start of this month. 
    The British pound weakened as far as $1.37050, also the
lowest since early February.
    In cryptocurrencies, bitcoin languished below
$54,000, less than two weeks since hitting a record high of
    Seasonal factors are likely exacerbating currency moves, as
some investors lock in profits ahead of the quarter-end and the
holidays of Easter and Passover, according to Masafumi Yamamoto,
chief currency strategist at Mizuho Securities.
    "The main scenario for the market, that the global economy
is recovering from the pandemic shock, is intact," he said.
    "We may see more of a correction into the start of April,
but after that I expect a restarting of a risk-on trade," with
commodity currencies of advanced economies benefitting most, he
    Currency bid prices at 539 GMT
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
 Euro/Dollar                  $1.1841        $1.1850     -0.08%         -3.09%      +1.1854     +1.1836
 Dollar/Yen                   108.5320       108.5750    -0.09%         +5.02%      +108.6270   +108.4750
 Euro/Yen                     128.53         128.65      -0.09%         +1.27%      +128.7500   +128.4500
 Dollar/Swiss                 0.9344         0.9338      +0.07%         +5.62%      +0.9347     +0.9337
 Sterling/Dollar              1.3706         1.3754      -0.34%         +0.33%      +1.3755     +1.3702
 Dollar/Canadian              1.2596         1.2588      +0.08%         -1.07%      +1.2601     +1.2581
 Aussie/Dollar                0.7597         0.7626      -0.31%         -1.18%      +0.7633     +0.7594
 NZ                           0.6978         0.7000      -0.25%         -2.77%      +0.7007     +0.6974
 Dollar/Dollar All spots
Tokyo spots
Europe spots 
Tokyo Forex market info from BOJ 

 (Reporting by Kevin Buckland; Editing by Tom Hogue)