* Dollar off 6-1/2-month lows
* Sterling recovers after dip on Manchester attack
* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh (Updates with afternoon U.S. trading, adds new comments)
By Saqib Iqbal Ahmed
NEW YORK, May 23 (Reuters) - The dollar rose against a basket of major currencies on Tuesday as its worst week of losses in a year drove some profit taking and investors turned their attention to Wednesday’s release of the minutes of the U.S. Federal Reserve’s meeting early this month.
The dollar index, which tracks the greenback against a basket of six major rivals, was up 0.2 percent to 97.178. The index fell to a more than six month low on Monday.
“It’s a little bit of profit taking on some of the currency pairs,” said Alfonso Esparza, senior currency analyst at OANDA in Toronto.
Worries over U.S. President Donald Trump’s recent firing of FBI Director James Comey, who was overseeing a probe into possible links between the president’s team and Russia, and concerns about possible delays in Trump’s efforts to implement his economic stimulus plans have recently pressured the dollar.
On Tuesday, U.S. Treasury Secretary Steven Mnuchin said while he hopes to get tax reform done this year, it will not happen by August.
Traders were also looking to the Fed meeting minutes set to be released at 2 p.m. E.T. (1800 GMT) on Wednesday to get clues to whether the Fed will raise rates at its June meeting, Esparza said.
Interest rate futures implied traders saw about a 83 percent chance of a rate increase at the Fed’s June meeting.
“We haven’t heard from any Fed members clarifying or warning the market that they are on the wrong side. That’s a positive sign that June is still a go and the Fed is likely to hike,” said Esparza.
Despite another strong batch of numbers from flash European purchasing manager surveys and a rise in German business morale to an all-time high, the euro was weaker.
The euro was down 0.29 percent against the dollar at $1.1203. The common currency rose as high as $1.1267, its highest since Nov. 9, earlier in the session.
“There are still huge question marks about British elections and Brexit that will always keep a cap on how much the euro can really rise,” Esparza said.
Meanwhile, sterling was subdued against the dollar as investors awaited further developments in Britain’s suspended election campaign after a suicide bombing rocked the English city of Manchester. The pound was down 0.09 percent against the greenback at $1.2986.
Reporting by Saqib Iqbal Ahmed; Editing by Chris Reese and Chizu Nomiyama