* Euro and sterling pull away from lows hit on Monday
* Focus on outlook for U.S. interest rates and economy
* Japan exporter selling may temper dollar rise vs yen
By Masayuki Kitano
TOKYO, June 9 (Reuters) - The dollar dipped against the euro on Tuesday, taking a breather after rallying in the wake of last week's U.S. jobs data, which stirred talk that the Federal Reserve may raise interest rates later this year.
The euro edged higher and pulled further away from lows hit on Monday, when ratings agency Standard & Poor's cut Ireland's sovereign credit rating to AA, its second downgrade in three months.
Sterling also edged higher after choppy trading on Monday, when it ended up rising around 0.4 percent after a sharp initial fall.
Sterling has rebounded after sliding the previous day as support for Prime Minister Gordon Brown's ruling Labour Party in European elections on Sunday plunged to its lowest level in a century, adding to uncertainty about his political future.
Traders said the focus was on whether forthcoming U.S. data would underscore the shift in market expectations towards a possible Federal Reserve rate increase later this year, which took hold after last week's jobs data showed that the pace of U.S. job losses slowed sharply in May.
"I think there is a mood among market players of wanting to take a close look at whether a recovery is really taking hold," said a currency trader for a Japanese bank.
Investors are likely to take cues from indicators such as U.S. retail sales data later this week, the trader said.
The euro rose 0.1 percent to $1.3920, having regained ground after dropping to $1.3806 on trading platform EBS on Monday, its lowest since late May.
Sterling rose 0.2 percent to $1.6077, up from Monday's low of $1.5803.
The dollar held steady against the yen at 98.51 yen, hovering near a one-month high of 98.90 yen hit on trading platform EBS on Friday.
The trader for the Japanese bank said Japanese exporters may sell dollars at levels above 98.50 yen, adding that such selling could temper any gains in the dollar against the yen. (Editing by Chris Gallagher)