Greenback pulls back after gains last week

NEW YORK CITY (AFP) - The US dollar pulled back on Monday following a drop in US Treasury yields, after strong gains last week backed by firm US data and the commitment by the European and British central banks to continued easing.

The euro rebounded from its lowest level since the beginning of April as the EU-ECB-IMF troika gave their stamp of approval on Greece's reform achievements under the bailout, assuring markets that Athens would receive its next life-support handout from the lenders.

At 2100 GMT the euro was at US$1.2868, compared to US$1.2832 late Friday.

The euro picked up on the Japanese yen as well, edging to 129.96 yen from 129.78, while the dollar pulled back to 100.99 yen from 101.14 yen.

The euro's gain came despite fresh comments from European Central Bank chief Mario Draghi emphasising the need to keep interest rates at current lows for as long as needed to support recovery in the region's ailing economy.

Mr Draghi "admitted that there are risks to prolonged low rates, but insisted that higher levels are not currently warranted and would run the risk of destabilising weaker economies within the euro-area," said FX360's analysis.

The British pound also rebounded, climbing to US$1.4950 from US$1.4893. The dollar was virtually flat against the Swiss franc at 0.9634 francs.

John Kicklighter of DailyFX said the key points behind the dollar's strength last week remained in place, especially the presumption that the Federal Reserve will begin reeling in its QE stimulus within months.

"The market is still debating the time frame of the inevitable taper. The consensus of a September reduction in the Fed's monthly US$85 billion injection of stimulus still holds," he said.