* Dollar hovers near 12-day high against yen
* Prospects of higher U.S. rates back in focus post-Greek deal
* U.S. retail sales, Yellen testimony on Wednesday in focus
By Shinichi Saoshiro
TOKYO, July 14 (Reuters) - The dollar strengthened against the yen and euro on Tuesday after Greece finally agreed to a debt deal with its creditors and allowed the market focus to shift back towards U.S. and European yield differentials.
The greenback performed well against the yen, which lost its safe-haven appeal with the worst-case-scenario of Greece exiting the euro seemingly averted.
The U.S. currency also stood tall against the euro. With the Greek debt saga off centre stage, the spotlight returned to when the Federal Reserve will begin hiking interest rates.
The dollar hovered just below a 12-day high of 123.74 yen , having pulled away from a near two-month low of 120.41 struck last week.
The euro was steady at $1.0985 after shedding about 1.5 percent overnight, weighed down in part by a decline in German Bund yields.
Dollar bulls had been given some fodder after Fed Chair Janet Yellen said Friday she expects a rate hike at some point this year - comments partially drowned out initially by the weekend's Greek debt negotiations.
Some focus will shift to U.S. retail sales data due later in the session, which would give investors a chance to see if fundamentals are backing up Yellen's views.
Also awaited is congressional testimony by Yellen on Wednesday and whether she drops further hints regarding the timing of a rate hike.
"The dollar should have a relatively easy time topping 124 yen, especially if Yellen sounds hawkish during the testimony," said Junichi Ishikawa, market analyst at IG Securities in Tokyo.
"Breaching 125 yen, however, is a different story. Japanese authorities have spoken out when the dollar nears 125," he said, adding that another factory to watch is volatility in Chinese stocks.
The dollar index was up 0.1 percent at 96.918 after touching a one-week high of 96.957.
The Australian dollar was little changed at $0.7399 . The Aussie, strongly impacted by Chinese stocks, hovered above a six-year trough of $0.7372 struck last week as Shanghai and other mainland indexes have for now stopped their recent massive slide. (Editing by Richard Borsuk)