FOREX-Dollar steadies after ECB rate outlook lifts euro

By Rika Otsuka

TOKYO, May 21 (Reuters) - The dollar steadied on Wednesday after hitting one-month lows against a basket of currencies the previous day as comments from a German government official stoked expectations of higher euro zone interest rates.

The dollar was also pressured by crude oil's rise to record highs near $130 a barrel CLc1 and a surge in gold XAU= as investors are concerned about the U.S. economy, which is facing weak growth and quickening inflation.

Data on Tuesday showed that U.S. producer prices excluding energy and food rose at their fastest pace since 1991 in the year to April, highlighting inflation concerns that may limit the Federal Reserve's options for supporting a weak economy. [ID:nN20291072]

Investors are now awaiting Germany's Ifo index of business sentiment for May due later in the day for more clues on whether the euro will extend its gains.

"Better-than-expected Ifo data is likely to boost the euro further," said Minoru Shioiri, chief manager of forex trading at Mitsubishi UFJ Securities.

"If the euro manages to climb steadily above $1.57, the European single currency will be set to rise towards its all-time high against the dollar," Shioiri said.

The dollar index was steady on the day around 72.40 .DXY, after falling to one-month lows around 72.35 the previous day.

The euro was little changed from late U.S. trading on Tuesday at $1.5650 EUR=. It hit all-time highs above $1.60 in April.