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Written by: Staff

TOKYO, Apr 18 (Reuters) The dollar steadied on Tuesday after tumbling the previous day on a growing view that the Federal Reserve could soon end its tightening cycle and due to nervousness about Iran's nuclear ambitions.

The U.S. currency fell around 1 percent against the euro and 0.8 percent versus the yen on Monday, despite dollar-positive data that showed more than enough capital flowed into the United States in February to offset its huge trade deficit.

The market's attention was turning to the minutes of the Fed's March meeting due later in the session for clues about whether the central bank would keep raising short-term interest rates beyond a widely expected increase in May, traders said.

The U.S. producer price index for March is also due later in the session, followed by the consumer price index on Wednesday.

''The market is looking for clues on the course of future monetary tightening, including from the PPI and the Fed's minutes,'' said Kikuko Takeda, currency strategist at Bank of Tokyo-Mitsubishi UFJ.

Takeda said the U.S. currency's weakness over the past few sessions, which had been thinned by Easter holidays in markets outside of Japan, didn't point to a shift away from a broader dollar-positive trend.

The dollar hasn't breached resistance at 119 yen but it hasn't fallen below mid-117 yen either, leaving the currency shuffling within a narrow range, she said.

Growing geopolitical tensions over Iran's nuclear programme helped to diminish demand for the dollar and pushed gold prices to a new 25-year high on Monday.

The metal, often favoured as a safe-haven investment, was also supported by a rise in U.S. oil crude prices, which leapt to $70 a barrel for the first time in seven and a half months on Monday and was poised to hit a record high near $71.

The market showed muted reaction to comments that Fed Chairman Ben Bernanke made earlier in the month but were reported for the first time late on Monday in the United States.

Bernanke said in an April 5 letter to South Carolina Republican Representative J. Gresham Barrett that the run-up in energy prices since late 2003 would not have a lasting impact on U.S. inflation as long as the Fed conducts policy appropriately.

In early Tokyo trade, the dollar was around 117.90 yen, up from around 117.80 yen in late New York trade on Monday.

The euro was at $1.2260, up from $1.2250. It bought 144.55 yen versus around 144.35 yen.

U.S. Treasury Department data on Monday showed net capital inflows of $86.9 billion in February, more than enough to cover the country's $65.7 billion trade deficit in the same month. Analysts had expected net inflows of $62.8 billion.


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