By David Henry
NEW YORK (Reuters) - The dollar rose on Tuesday as interest rates in the United States moved in a tight range and a drop in oil prices hit crude-linked currencies.
After touching its lowest level in nearly seven weeks, the dollar index against major currencies rose 0.2% to 91.204 in the afternoon in New York.
The euro was flat at $1.2033 after rising nearly 0.4% on the outlook for increasing vaccinations. The British pound fell 0.4% to $1.3937 after it backed off from touching $1.40 and gaining 1% on Monday.
The dollar has fallen in April as U.S. bond yields retreated from the 14-month highs of 1.776% reached last month. The currency and yield declines have come as evidence mounted that the Federal Reserve would be slower about tightening monetary policy than it had appeared to the market, analysts said.
The 10-year Treasury yield slipped to 1.57% after trading in a narrow range around 1.60%.
The currency and interest rate markets could be relatively calm for another few weeks as the Fed and the European Central Bank each take their time about adjusting their rate policies, said Mazen Issa, senior currency strategist at TD Securities.
"There really isn't a strong catalyst in either direction this month to really break us out of ranges," Issa said.
Some encouragement for the euro came from the announcement that the European Union has secured an additional 100 million doses of the COVID-19 vaccine produced by BioNTech and Pfizer.
The vaccination news suggests that the pace of Europe's recovery from the pandemic will begin to catch up with the United States and its story of faster growth, Issa said.
"The FX market is moving away from this idea of full-on U.S. exceptionalism to being in a little bit more in limbo now," he said.
Against the Japanese yen, the dollar edged up to 108.09 after having broken below 108 for the first time since March 5.
Oil-linked currencies took a hit when crude prices fell 1% on fears that surging coronavirus infections in India will bring restrictions and reduce demand for oil.
The Canadian dollar, which had been steady ahead of a Wednesday meeting of the Bank of Canada, then weakened the most in nearly two months to 1.2620 against the dollar, or 79.24 U.S. cents. The Norwegian crown retreated from its strongest levels against the dollar since 2018.
Mexico's peso also weakened with oil after hovering around three-month highs on the strength of carry trades in high-yield emerging market currencies bolstered by recent low volatility.
Bitcoin rose 1% to $56,211 on Tuesday afternoon.
(Reporting by David Henry in New York. Additional reporting by Elizabeth Howcroft, Hideyuki Sano and Kevin Buckland; Editing by Larry King, Steve Orlofsky, Alex Richardson and Dan Grebler)