* Bets on a weaker dollar rise to highest since Feb 2013
* Declining Treasury yields also weigh
* Fed unlikely to offer much dollar support this week
* Graphic: World FX rates in 2017 http://tmsnrt.rs/2egbfVh
LONDON, July 24 (Reuters) - The dollar fell to a 13-month low against a trade-weighted basket of currencies on Monday, weighed down by softening U.S. Treasury yields and weak data that is undermining the case for a further rise in interest rates this year.
Speculative "short" bets against the U.S. dollar reached the highest since February 2013 last week, according to calculations by Reuters and Commodity Futures Trading Commission data released on Friday.
"A weaker dollar seems to be the path of least resistance given the soft data coming out of the U.S. and the political uncertainty," said Michael Hewson, chief markets strategist at CMC Capital Markets in London.
On Monday, the dollar index, measuring the currency's strength against a basket of other currencies, fell to 93.823, its lowest level since June 2016.
While the index has drifted lower since peaking in March this year, its decline has accelerated in recent weeks thanks to falling U.S. Treasury yields. Yields on ten-year benchmark U.S. bonds have shed 16 basis points in two weeks.
Investigations into alleged Russian meddling in the 2016 U.S. presidential election and whether there was collusion with President Donald Trump's campaign are viewed as obstacles to the administration's plans to boost economic growth and a negative for the dollar.
Traders expect little relief for the dollar in a week marked by the U.S. Federal Reserve's regular meeting on policy, with the index on track to test the June 2016 lows of 93.451.
Markets expect the central bank to keep policy rates on hold and odds on a hike by the end of the year have been whittled down to less than fifty percent, according to CME's Fedwatch tool.
"The FOMC decision on Wednesday will likely be a non-event as our strategists expect only modest adjustments to the characterisation of the economic backdrop and no change to the policy language," RBC Capital Markets strategists said in a note.
A number of analysts have suggested playing the dollar-negative trade through the euro as improving economic data add to expectations of a gradual tightening of European monetary policy.
By 0737 GMT on Monday, the euro was perched at $1.1647 - less than half a cent off an almost two-year high hit earlier in Asian trade.
For Reuters Live Markets blog on European and UK stock markets see reuters://realtime/verb=Open/urlhttp://emea1.apps.cp.extranet.thomsonreuters.biz / c m s / ? p a g e I d = l i v e m a r k e t s (Reporting by Saikat Chatterjee; Additional reporting by Shinichi Saoshiro in TOKYO; editing by Patrick Graham)