By Anirban Nag
LONDON (Reuters) - The dollar hit a 11-month high against the yen and hovered near a seven-week high versus a basket of currencies on Tuesday, supported by expectations that a U.S. economic revival will keep the Federal Reserve from resorting to fresh stimulus.
The dollar recouped losses against the yen made after the Bank of Japan stopped short of taking aggressive easing steps on Tuesday. That wrongfooted investors who had bet on a repeat of the central bank's surprise easing last month.
The dollar index <.DXY> stood at 79.981, not far from a high of 80.132 struck on Monday, its highest in seven weeks. Analysts say with the Fed unlikely to be in a hurry to announce fresh measures, given Operation Twist is in play, the focus would be on retail sales for February.
The data is expected to reflect solid auto and gasoline sales and is likely to push the dollar higher, especially against the yen, with the pair likely to test the 83 yen level.
"There is an upside risk to U.S. retail sales data, given the underperformance seen last month," said Steve Barrow, head of G10 currency research at Standard Bank. "That should give reasonable support to the dollar against the yen and could see it rise well above 82.50 yen towards recent highs."
He said strong retail sales out of the U.S., as well as a good German ZEW sentiment survey, would combine to support stocks and growth-linked currencies like the Australian and New Zealand currencies... read more.
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