* US dollar hits one-month highs vs euro, yen
* U.S. data helps bolster dollar
* US dollar gives up some gains late as yields retreat
* Sterling gains on BoE inflation outlook
(Updates prices, adds comment, detail)
NEW YORK, Nov 10 (Reuters) - The U.S. dollar hit a one-month high against the euro and yen on Wednesday, as rising U.S. bond yields prompted traders to cut bets against the greenback but some gains were lost late in the day.
Worries about Ireland's high debt burden kept the euro weak against the dollar for a fourth straight day though the euro was well off the session low in volatile trading after a U.S. Treasury bond auction attracted mediocre demand.
Better U.S. economic data, including a decline in weekly initial jobless claims, had some analysts suggesting the U.S. economy was gaining traction after months of frustratingly slow growth. For details, see [ID:nN10164638]
Investors had sold dollars in recent months on expectations the Federal Reserve's plans to pump more money into the economy to boost growth would drive already low U.S. yields even lower, but so far those expectations have been frustrated.
"The U.S. yield curve has steepened, and since the whole world has had the same position on, we've got a lot of end-of-the-year, risk management going on," said Sebastien Galy, senior currency strategist at BNP Paribas.
The euro fell as low as $1.3671 and was last changing hands
at $1.3774
"We had that drop real strong, then saw Asian central banks and Middle East names buying the euro and keeping it above $1.3750," said Dean Malone, a currency director at Compass FX in Dallas, Texas.
The $1.3650 level is the 38.2 percent Fibonacci retracement of the low from September 10 to the November 4 high and it seems investors are defending it, Malone said.
BNP Paribas said it could fall as far as $1.3435 as it retraces a multi-month rally that peaked last month at $1.4281, a 9-1/2-month high.
YEN FALLS
The dollar climbed as high as 82.79 yen
At the session peak of 82.79, dollar/yen broke through the 50-day simple moving average of 82.77 though it failed to hold. It was the first breach of that average since it last traded above that level on September 21.
Those levels may provide resistance to further dollar gains. Using the 14-day relative strength index, dollar/yen has gone into overbought territory for the first time since April 5, another sign that the dollar may struggle against the yen.
The dollar briefly extended gains against the euro and yen, climbing to a session peak against the yen on electronic trading platform EBS in a kneejerk reaction to a weak 30-year Treasury bond auction. The release of a Federal Reserve schedule for purchasing government securities over the coming month added to the volatility.
The dollar then gave up gains against the euro in what analysts said was position adjustment after the auction.
FUNDING CURRENCY QUESTIONS
Elsewhere, sterling rose 0.8 percent to $1.6114
The euro struggled after Portugal was forced to pay a
higher premium than previously at a bond auction and after
Ireland's central banker said Irish bond yields were at "crisis
levels." The gap between benchmark Irish and German bond yields
expanded to a euro lifetime high. [GVD/EUR]
Graphic on Ireland's bailout challenge
http://r.reuters.com/wuv48p
(Reporting by Nick Olivari and Steven C Johnson)