FOREX-Dollar slips as investors pare Fed-fuelled long bets
* Dollar index retreats from near three-week highs
* Fed officials play down of imminent stimulus withdrawal
* U.S. data in focus later in the session
LONDON, June 25 (Reuters) - The dollar fell for the first time in a week on Tuesday against a currency basket, as investors pared long positions after some Federal Reserve officials downplayed expectations of an imminent end to stimulus.
The U.S. currency, though, recouped some of its losses against the safe-haven yen after global shares rebounded, with some investors encouraged by comments from China that calmed concerns about a credit crunch there.
The dollar's pullback would draw more investors to build favourable bets as expectations the Fed will move away from its ultra-loose monetary policy were broadly intact, traders said.
The U.S. consumer confidence report for June and durable goods and housing sector data will be watched later in the session. Good figures would support the dollar.
"We could see the dollar consolidate here," said Ian Gunner, portfolio manager at Altana Hard Currency Fund. "Not only has the price action been a bit overdone but also the way the market has interpreted the way tapering will be done. Such tapering will be very data-dependent."
The dollar was down 0.15 percent on the day at 82.291, retreating from a near three-week peak of 82.841 on Monday. The dollar was down 0.35 percent at 97.35 yen, off Monday's two-week high of 98.72 yen, with bids cited at 96.80 that could check the dollar's drop.
The dollar and U.S. Treasury yields came off their peaks late on Monday, after Minneapolis Fed President Narayana Kocherlakota and Dallas Fed head Richard Fisher both reassured investors who feared the impact of the Fed tapering its monthly $85 billion bond-buying programme.
The IMF's chief economist Olivier Blanchard said on Tuesday that Fed talk of exiting its stimulus could spur volatility on global markets, adding recent movements had been exaggerated.
Volatility has jumped due to turmoil in China markets which have been roiled by concerns about a potential money market squeeze. In an attempt to calm nerves, China's central bank said it would guide markets to reasonable rates.
"The dollar trend will remain very much in place... The dollar will not only be supported by the Fed tapering debate but if we see equity markets supported by Fed reassurance, that will be dollar-positive," said Ian Stannard, head of European FX strategy at Morgan Stanley.
The euro was flat at $1.3130, away from a low of $1.3058 on Monday, its weakest level since June 5.