* Dollar edges towards last week's high
* Euro bulls cut positions from multi-year highs
* Graphic: World FX rates in 2018 tmsnrt.rs/2egbfVh
By Tommy Wilkes
LONDON, April 30 (Reuters) - The dollar held steady just below its strongest level since mid-January on Monday, leaving the euro pinned near three-month lows, as a pullback in U.S. treasury yields kept a lid on the U.S. currency's recent rally.
Traders are readying for German inflation data and consumer spending numbers due out of the U.S. later to see whether the dollar can continue a run of gains that has encouraged some analysts to predict the currency, which has weakened for most of the past year, can strengthen further.
The 10-year U.S. Treasury yield surpassed 3 percent last week, encouraging investors to buy the dollar and cut their euro exposure.
Positioning data shows that net long euro positions by speculators fell last week, albeit it from a multi-year high, suggesting investors remain bullish on the single currency.
"With U.S. yields meandering around the 3 percent market, in the near term the dollar can definitely rise further," said Alvin Tan, FX strategist at Societe Generale. "That said, we think longer term the euro can move higher."
The dollar's index against a basket of six major currencies rose 0.1 percent to 91.652, down from Friday's high of 91.986, its strongest level since Jan. 11.
The single currency dropped 0.1 percent to $1.2114, not far from its lows last week of $1.2110.
The euro enjoyed a strong rally at the start of this year but doubts over the speed at which the European Central Bank will normalise monetary policy and some signs the region's economic rebound has peaked left the currency stuck in a trading range before the dollar's recent bounce.
The dollar index had risen more than 1.3 percent last week for its biggest weekly gain in over two months.
The U.S. 10-year yield has since come off its peak , a four-year high of 3.035 percent struck on Wednesday.
Earlier this year, the correlation between U.S. yields and the dollar had broken down as investors focused more on trade frictions and geopolitical issues.
Markets, however, have recently turned their attention back to interest rate plays as concerns over the U.S.-China trade dispute and tensions over North Korea's nuclear programme eased, giving the greenback a leg up.
The dollar inched up 0.2 percent to 109.25 yen, having set a 2-1/2 month high of 109.54 yen on Friday. But trade was thin with Japanese markets closed for a holiday.
The dollar has risen more than 2.6 percent against the yen in April, putting it on track for its best monthly performance since November 2016.
"The dollar has come a long way, and my sense is that it doesn't have the strength to break above 110 yen for now," said Satoshi Okagawa, senior global markets analyst for Sumitomo Mitsui Banking Corporation in Singapore.
Events and data coming up this week include the U.S. Federal Reserve's May 1-2 policy meeting, at which the central bank is expected to keep rates unchanged, as well as U.S. jobs data due on Friday.
With trade tensions between China and the United States easing. a delegation of U.S. officials are expected in China later this week for trade negotiations. (Additional reporting by Masayuki Kitano in SINGAPORE Editing by Matthew Mpoke Bigg)