* Euro eases from 6-month high vs dollar, 1-year high vs yen
* Dollar index rises above 6-month low plumbed earlier
* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh
By Ritvik Carvalho
LONDON, May 8 (Reuters) - The euro retreated on Monday from highs hit on centrist Emmanuel Macron’s victory in France’s presidential election, with investors taking profit on a roughly 3 percent gain for the currency since he won the first round two weeks ago.
Macron’s resounding defeat of nationalist Marine Le Pen has relieved investors who had feared another populist upheaval after Britain’s vote to exit the European Union and Donald Trump’s election as U.S. president last year.
But after opinion polls had shown Macron consistently around 20 percentage points or more in front, his crushing victory on Sunday was widely expected.
In early Asian trading the euro rose as high as $1.1024 , its highest since Nov. 9. It also jumped to a one-year high of 124.58 yen.
But by midday in Europe, it had fallen back 0.4 percent to $1.0953 against the dollar, and 0.6 percent to 123.33 yen.
“The euro has had two successive positive weeks on the back of the expectation that Emmanuel Macron would win,” said Michael Hewson, chief markets analyst at CMC Markets in London, who said markets had largely priced in Macron’s victory.
The removal of the political risk investors had associated with Le Pen - who had promised to take France out of the euro - leaves them refocusing on economic fundamentals and the relative pace of monetary policy normalisation in Europe and the United States.
Short positions on the euro reached their lowest level since early May 2014 in the week up to last Tuesday, data showed on Friday.
“It’s really a question now of what’s going to happen next with respect to the U.S. Federal Reserve with one rate rise priced in between now and the end of the year, and what’s the probability that the European Central Bank will look to taper monetary policy before the end of the year,” Hewson said.
U.S. job numbers released on Friday were solid and yield spreads back the dollar over the euro. But traders are also growing more confident about the prospect of the European Central Bank at some point moving away from its bond-buying stimulus programme.
The dollar was slightly lower on the day at 112.63 yen , after jumping to a seven-week high of 113.14 yen in overnight trade.
The dollar index, which tracks the U.S. currency against a basket of six rivals, added 0.2 percent to 98.963, after dipping as low as 98.543 earlier, its lowest since November.
Friday’s U.S. employment data, showed nonfarm payrolls rose by 211,000 in April. The unemployment rate fell to 4.4 percent, near a 10-year low and well below the most recent Federal Reserve median forecast for full employment.
But job growth in March was revised downward, and the labour force participation rate dipped slightly. Overall, the figures did not appreciably alter market expectations that the U.S. Federal Reserve is on track to raise interest rates next month.
Analysts at Commerzbank said a slack in U.S. wage growth could begin to stop supporting the dollar.
But Barclays currency strategist Hamish Pepper said wage inflation would ultimately follow from growing labour market pressures.
“If we construct an output gap for the U.S. using labour market variables, it still tells us that there’s a fair amount of capacity pressure in the economy and that wage inflation should follow from that,” he said.
“So even though you may not be seeing it now, the indicators are that you should see it going forward, and that’s what policy has to respond to.”
U.S. retail sales and core inflation data this week could add to evidence backing expectations of a Fed hike.
For Reuters Live Markets blog on European and UK stock markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets
Additional reporting by Tokyo markets team,; Editing by Mark Trevelyan and Ed Osmond