* 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 awaited (Adds details, quotes)
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, allowing market focus to shift back towards U.S. and European yield differentials.
The greenback performed well against its Japanese peer, which lost its safe-haven appeal with the worst-case-scenario of Greece exiting the euro seemingly averted.
The dollar was steady at 123.46 yen after touching a 12-day high of 123.74 yen, having pulled away from a near two-month low of 120.41 struck last week.
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. In contrast, the European Central Bank and the Bank of Japan are seen continuing with their super easy monetary policies for the foreseeable future.
The euro was little changed at $1.1007 after shedding about 1.5 percent overnight, weighed down in part by an decline in German Bund yields.
"Things simply reverted back to dollar-buying, with many in the market swiftly dropping Greece as a factor," said Masashi Murata, senior currency strategist at Brown Brothers Harriman in Tokyo.
"The euro also looks overstretched against the dollar after managing to rise somehow during the Greek debt crisis. It's difficult to imagine the ECB accepting a euro that is too strong," he said.
The common currency slid to a 12-year low of $1.0457 in March when the ECB launched its quantitative easing policy. But it spent much of the past two months above $1.11 as talks between Greece and its creditors dragged on.
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 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 down 0.2 percent at 96.779 after touching a one-week high of 96.957.
The Australian dollar was up 0.3 percent at $0.7428 following upbeat domestic business survey data.
The Aussie, strongly impacted by Chinese stocks, fell to a six-year trough of $0.7372 last week during the height of a rout in Shanghai and other mainland indexes. Chinese stocks have shown signs of stabilising since, giving the Aussie a breather.
Editing by Richard Borsuk & Shri Navaratnam