Dollar slips on doubts Fed will speed rate hikes, euro edges up

TOKYO (Reuters) - The dollar was on the defensive in Asian trading on Tuesday, after Chicago Federal Reserve President Charles Evans reinforced the perception that the U.S. central bank won't accelerate the pace of its interest rate hikes.

The dollar index, which tracks the greenback against a basket of six major rivals, edged down 0.1 percent to 100.30 (DXY) after falling as low as 100.02 overnight, its lowest since Feb. 7.

The euro gained 0.1 percent on the day to $1.0754 , though it remained shy of last week's high of $1.0782.

France's coming two-round election on April 23 and May 7 remained in focus, with nearly 40 percent of voters saying they are undecided about which of five main contenders to back.

The leading candidates clashed in a televised debate on Monday, with centrist Emmanuel Macron accusing far-right leader Marine Le Pen of lying and seeking to divide the French. Macron apparently solidified his status as frontrunner.

"There was a bit of relief rally, or a squeeze in the euro higher, on the back of news that Macron is ahead, but it's pretty much in the price and we have some ways to go before the election," said Sue Trinh, head of Asia FX strategy at Royal Bank of Canada in Hong Kong.

"U.S. dollar weakness is the main theme," she said.

Sterling edged down slightly to $1.2356 , but remained well shy of its Monday high of $1.2436, its loftiest peak since Feb. 28. The pound was toppled by Prime Minister Theresa May's statement that she will trigger Britain's separation proceedings with the European Union on March 29, launching two years of Brexit negotiations.

On Monday, the Fed's Evans, a voter on its policy-setting committee this year, repeated the central bank's call for two more interest rate increases this year, disappointing dollar bulls who had hoped for more a faster pace of hikes.

Evans did say, however, that an additional hike was possible if inflation were to pick up.

The Fed lifted interest rates last week and said that its future course of hikes would be "gradual". That pushed down U.S. Treasury yields, to the dollar's detriment.

The yield on benchmark 10-year notes (US10YT=RR) stood at 2.480 percent in Asian trading, compared with its U.S. close on Monday of 2.472 percent.

The dollar added 0.2 percent to 112.79 yen as bargain-hunting emerged after it dipped as low as 112.26 earlier, its deepest trough since Feb. 28, as market participants in Tokyo returned from a public holiday on Monday.

Mitsuo Imaizumi, Tokyo-based chief foreign-exchange strategist for Daiwa Securities, said the dollar felt pressure from lower U.S. Treasury yields earlier in the session.

"There will be a lot of stop-loss selling if the dollar breaks under 112 yen," he added.

Kansas City Fed President Esther George, Cleveland Fed President Loretta Mester and Boston Fed President Eric Rosengren will all speak later on Tuesday. Fed Chair Janet Yellen is scheduled to speak at a conference on Thursday.