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NEW YORK (Reuters) - The U.S. dollar rose broadly on Tuesday, on course for its steepest gain against the euro in two weeks following hawkish comments from Federal Reserve officials, and boosted by European political uncertainty.
Cleveland Fed President Loretta Mester said late on Monday she would be comfortable raising rates at this point if the economy maintained its current performance, while Market News International quoted Philadelphia Fed President Patrick Harker as saying that a March rise was on the table.
Investors were also awaiting remarks later in the week from Fed Board Governor Jerome Powell, Atlanta Fed President Dennis Lockhart and Dallas Fed President Robert Kaplan.
"There is the prospect of a Fed rate hike in March, which although somewhat priced into markets, isn't fully priced into the markets yet," said Douglas Borthwick, managing director at Chapdelaine Foreign Exchange in New York.
Fed funds futures on Tuesday implied that traders saw a 22.1 percent chance of a Fed rate increase in March, according to CME Group's FedWatch program. Solid economic data and rises in U.S. inflation have led Fed policymakers including Chair Janet Yellen to promise a rise in rates soon.
The dollar index .DXY, which measures the greenback against a basket of six major currencies, was last up 0.4 percent at 101.370 after hitting a six-day high of 101.600 earlier.
Against the yen, the dollar was up 0.5 percent JPY= at 113.61 yen, putting it on track for its biggest one-day gain against the Japanese currency in eight days.
The euro fell as much as 0.8 percent to a six-day trough of $1.0526 on concerns over anti-European Union rhetoric from French presidential candidate Marine Le Pen and Dutch candidate Geert Wilders ahead of the first round of French elections on April 23. The currency was also depressed by the Netherlands' March 15 parliamentary election and the hawkish Fed statements.
"We're starting to see that political risk ... growing," said Alfonso Esparza, senior currency strategist at Oanda in Toronto. "The fact that there's an anti-European Union probability for France has the euro weaker against the dollar."
The euro pared losses against the dollar later in the U.S. trading session and was last down 0.6 percent at $1.0547. The euro fell to 8.8014 Norwegian crowns EURNOK=, its lowest since July 2015 as oil, one of Norway's main sources of revenue, gained. Benchmark Brent crude futures settled up about 0.9 percent at $56.66 a barrel.
Reporting by Sam Forgione; Additional reporting by Patrick Graham in London; Editing by Grant McCool and Richard Chang