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TOKYO, Apr 13 (Reuters) The dollar stuck to a narrow range on Thursday but traders said that investors were girding to take profits from the U.S. currency's recent rise ahead of the Easter holiday weekend.

The dollar firmed after the U.S. trade deficit for February came in narrower than expected at $65.7 billion on Wednesday, the third widest on record but below economists' estimates of $67.5 billion.

But the dollar was capped after Iran said it had successfully produced the enriched uranium needed to make nuclear fuel for the first time, raising concerns about heightening tension with the United States, traders said.

''Iran is a worrying issue that could trigger dollar selling,'' said Tatsuro Karitani, senior trader at Mizuho Corporate Bank.

Chinese President Hu Jintao's visit to Washington next week could also be a risk for the dollar, Karitani said, given the huge trade gap with China, and Washington's pressure on Beijing to boost the yuan to help contract the deficit.

A trader at a Japanese bank said investors would likely take profits after March U.S. retail sales due later in the session, which are expected to show an improvement from the previous month, to square positions before the long Easter weekend in markets outside of Japan.

In early Asian trade, the dollar was buying 118.45 yen down slightly from the level in late U.S. trade on Wednesday.

The euro was little changed at $1.2100.

The single European currency slipped to 143.20 yen from around 143.50 yen, moving away from 144.88 hit last week on electronic trading platform EBS -- the highest since the euro was launched in January 1999.

The New Zealand dollar jumped more than 1 percent to hit a three-week high against the U.S. dollar earlier in the session after stronger than expected retail sales data.

Traders said that investors may also be cautious about buying the U.S. dollar ahead of a Treasury Department report next week on foreign capital flows into the United States, which have helped finance the huge U.S. trade deficit.

Japanese investors have been cautious about buying foreign bonds in the new fiscal year that started on April 1.

Japanese life insurers have told Reuters in recent interviews that they are more interested in buying Japanese government bonds, now that yields are rising in anticipation of the Bank of Japan raising interest rates.

The Federal Reserve is expected to raise rates in May and possibly again after that, but expectations are growing that the U.S. central bank will then end its tightening cycle.

REUTERS DH BD0658