FOREX-U.S. dollar advances on investor caution ahead of Fed meeting

    * Focus on central bank meetings this week
    * Dollar index gains for 3rd day
    * Dollar up vs yen, hits highest since June
    * Bitcoin comes off highs hit over weekend 

 (Adds comment, updates prices)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, March 15 (Reuters) - The dollar gained for a third straight session on Monday, as traders cut
their bearish bets on the greenback to four-month lows amid the recent rise in U.S. Treasury yields and grew
cautious ahead of the Federal Reserve's policy meeting this week.
    Aside from the Fed, the Bank of England and the Bank of Japan are also set to meet this week and all
three will likely set the tone on where global interest rates are headed.
    U.S. Treasury yields, however, were lower on Monday in line with Europe, ahead of these central bank
gatherings. Benchmark 10-year Treasury yields traded as high as 1.639% on Monday, close to
Friday's top of 1.642%, a level last seen in February 2020. The yield was last at 1.61%.
    "The market is in a holding pattern waiting for the FOMC this week. A big part of that involves
questions on whether the Fed is going to talk about the yield curve or whether they're going to address the
rise in long-dated yields," said Amo Sahota, executive director at Klarity FX in San Francisco.
    Gains in the greenback were more pronounced against low-yielding currencies such as the euro
and the British pound, while high-yielding currencies like the Australian dollar fared
relatively better.
    Rising U.S. yields have lifted the greenback 2% so far this year thanks to widening interest rate
differentials relative to other major bond markets. The dollar declined more than 4% in the last quarter of
    In afternoon trading, the dollar index, which tracks the U.S. currency against six major peers,
was up 0.1% at 91.799. It hit a late November 2020 high of 92.51 last week.
    The U.S. currency has been supported by declining bets for its decline, with speculators cutting net
short positions to the lowest since mid-November in the week ended March 9.        
    Rising bond yields will continue to focus minds this week before a Fed meeting at which some analysts
expect policymakers to strike an optimistic tone on the U.S. economy.
    While there are some expectations that the Fed might try to calm bond markets - yields have risen some
60 basis points since the last Fed meeting - the consensus view is that Fed Chief Jerome Powell will not
make changes to policy.
    "If the Fed does not address the issue on yields, then the drive toward a stronger dollar will start to
gain foothold, which is different from what most people expected at the beginning of the year," said
Klarity's Sahota.
    The dollar rose 0.1% against the yen to 109.15, after earlier climbing to 109.36 yen, the
highest since June 2020. 
    The euro weakened 0.2% to $1.1926 after rising last week for the first time in three weeks as
latest data showed hedge funds slashed their net euro positions. 
    The Australian dollar - viewed widely as a liquid proxy for risk appetite - slipped 0.1% to
US$0.7750, extending Friday's Loss.
    Bitcoin, meanwhile, dropped more than 5% after surging to a record high of $61,781.83 over the weekend.
It was last down at $56,046.
    Currency bid prices at 3:00PM (1900 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct       High Bid    Low Bid
                                              Previous                   Change                   
 Dollar index                 91.8280        91.6800     +0.17%         2.053%        +91.9670    +91.5370
 Euro/Dollar                  $1.1926        $1.1953     -0.23%         -2.39%        +$1.1968    +$1.1911
 Dollar/Yen                   109.1400       109.0200    +0.09%         +5.64%        +109.3550   +108.9300
 Euro/Yen                     130.14         130.29      -0.12%         +2.54%        +130.4800   +130.0000
 Dollar/Swiss                 0.9281         0.9296      -0.16%         +4.91%        +0.9312     +0.9267
 Sterling/Dollar              $1.3889        $1.3970     -0.59%         +1.65%        +$1.3948    +$1.3854
 Dollar/Canadian              1.2473         1.2475      +0.00%         -2.03%        +1.2512     +1.2442
 Aussie/Dollar                $0.7750        $0.7758     -0.10%         +0.74%        +$0.7775    +$0.7706
 Euro/Swiss                   1.1068         1.1107      -0.35%         +2.42%        +1.1108     +1.1061
 Euro/Sterling                0.8584         0.8588      -0.05%         -3.95%        +0.8600     +0.8555
 NZ                           $0.7196        $0.7177     +0.28%         +0.22%        +$0.7216    +$0.7170
 Dollar/Norway                8.4595         8.4395      +0.24%         -1.48%        +8.5095     +8.4140
 Euro/Norway                  10.0903        10.0750     +0.15%         -3.60%        +10.1424    +10.0431
 Dollar/Sweden                8.5186         8.4783      +0.25%         +3.93%        +8.5474     +8.4691
 Euro/Sweden                  10.1595        10.1338     +0.25%         +0.82%        +10.1912    +10.1339
 (Reporting by Gertrude Chavez-Dreyfuss; Editing by Catherine Evans, Alexander Smith, Andrea Ricci and
Jonathan Oatis)

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