FOREX-Dollar extends four-month high against euro as recovery outlooks diverge

    * Aussie bounces off multi-week low as most Asian stocks
    * Bitcoin on back foot after dipping below $52,000
    * Graphic: World FX rates

    By Kevin Buckland
    TOKYO, March 25 (Reuters) - The dollar hit a fresh
four-month high against the euro on Thursday as the U.S.
pandemic response continued to outpace Europe's, which has been
hobbled by extended lockdowns and delayed vaccine rollouts.
    The safe-haven greenback held on to most of a broad two-day
advance, which has been fuelled by worries ranging from Europe's
third COVID-19 wave and potential U.S. tax hikes to the
persistent spectre of inflation.
    Even Germany's reversal of a call for a strict lockdown over
the Easter period did little to build confidence in the region's
economic outlook, instead compounding discontent with Chancellor
Angela Merkel's handling of the pandemic.
    "The weak point in Europe remains around the vaccine rollout
amid the rise in new virus cases and the tightening of
restrictions ... which likely means the mooted acceleration in
Q2 may have to be pushed back by a quarter," Tapas Strickland,
director of economics and markets at National Australian Bank,
wrote in a client note.
    "The narrative of the U.S. outperforming Europe in the
coming quarter remains."
    The euro traded near the four-month low of $1.1809
touched earlier in the Asian session, while a gauge of the
dollar against six major peers hovered just below a
four-month high of 92.617 reached overnight.
    The dollar gained 0.2% to 108.905 yen, another
safe-haven currency, as the pair continued to consolidate below
    At the same time, the dollar's rally showed some signs of
fatigue, as some of its bruised rivals recovered from lows amid
gains in many Asian equity markets.
    Australia's dollar, considered a liquid proxy for
risk appetite, bounced 0.3% after earlier dipping to $0.7579,
the lowest level since Feb. 2.
    The British pound rose 0.2%, climbing out of a
six-week trough at $1.3675.
    Meanwhile, benchmark 10-year Treasury yields
consolidated around 1.6%, a week after hitting a more than
one-year top of 1.754%, which had also supported the dollar.
    "The U.S. longer-term Treasury yield is lower than the
previous week’s level, and that is a very big factor for the
improvement in market sentiment," said Minori Uchida, chief
currency analyst at MUFG Bank.
    "Even if the yield is 1.6 or 1.7%, it is not enough to push
up the dollar constantly."
    On Wednesday, U.S. Treasury Secretary Janet Yellen and
Federal Reserve Chair Jerome Powell expressed their confidence
in the U.S. recovery during a second day of testimony to
    Yellen told Senate lawmakers she was open to banks buying
back stock and paying dividends, an updated view showing her
confidence in the economy. Powell also said he thinks 2021 will
be a "very, very strong year in the most likely case."

    A day earlier, though, the treasury secretary had put
investors on alert after espousing tax hikes to pay for
President Joe Biden's plans for upgrading infrastructure and
other investments. 
    Inflation could also rear its head as disruptions in the
supply chain exert cost pressures for manufacturers, with U.S.
factory activity picking up in early March.
    Meanwhile in Europe, an unexpected expansion of business
activity did little to brighten the mood, with renewed COVID-19
lockdowns in many of the bloc's member nations meaning the gains
may not last through April.
    Concerns have been magnified because the third wave of
infections is being largely driven by the U.K. strain of the
virus, according to Commonwealth Bank of Australia strategist
Kim Mundy.
    "The risk is that the more contagious and deadly strain of
the virus elicits a stronger response from European governments,
which sees Europe remaining locked down for longer," she wrote
in a note.
    "A significant delay to Europe's re-opening efforts will
only widen the divergence between the economic outlook in Europe
and the U.S.," putting additional pressure on the euro, she
    In cryptocurrencies, bitcoin continued to swing
widely, falling below $52,000 again in early Asian trading
before recovering to around $52,123. 
    That is after briefly topping $57,000 overnight after Tesla
Inc boss Elon Musk said customers can now buy the
company's electric cars with the digital token.
    Bitcoin hit a record high of $61,781.83 on March 13.
    Currency bid prices at 400 GMT
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
 Euro/Dollar                  $1.1823        $1.1815     +0.07%         -3.23%      +1.1828     +1.1804
 Dollar/Yen                   108.8850       108.6800    +0.21%         +5.44%      +108.9770   +108.7500
 Euro/Yen                     128.74         128.42      +0.25%         +1.43%      +128.8300   +128.4300
 Dollar/Swiss                 0.9354         0.9358      -0.06%         +5.71%      +0.9365     +0.9352
 Sterling/Dollar              1.3699         1.3680      +0.17%         +0.30%      +1.3707     +1.3680
 Dollar/Canadian              1.2569         1.2582      -0.08%         -1.28%      +1.2588     +1.2566
 Aussie/Dollar                0.7603         0.7581      +0.30%         -1.16%      +0.7613     +0.7579
 NZ                           0.6976         0.6961      +0.21%         -2.86%      +0.6985     +0.6960
 Dollar/Dollar All spots
Tokyo spots
Europe spots 
Tokyo Forex market info from BOJ 

 (Reporting by Kevin Buckland; Editing by Christopher Cushing
and Ana Nicolaci da Costa)