* ECB minutes reveal concerns of currency overshoot
* Dollar erases most losses sustained in last 24 hours
* Graphic: World FX rates in 2017 http://tmsnrt.rs/2egbfVh
LONDON, Aug 17 (Reuters) - The dollar rebounded across the board on Thursday, reserving some of its strongest gains against the euro after minutes of the July meeting by the European Central Bank prompted investors to cover bearish bets against the greenback.
The move put the single currency, already sharply down on the day against the dollar, on track for its biggest daily loss in more than four months.
The minutes showed rate-setters were highly aware of the risk that the euro could threaten the ECB's efforts to nudge inflation higher as they decided against any change to their pledge for continued monetary stimulus last month.
"The reality is the ECB is definitely more concerned than the market gave it credit for," said Simon Derrick, chief market analyst with Bank of New York Mellon in London.
"I think it is entirely possible you could see further downward pressure on the euro from here."
The dollar jumped 0.4 percent against a broad trade-weighted basket of its rivals erasing much of its overnight losses.
"It is very difficult to ignore much higher U.S. yields relative to G7 peers for any sustained period and the market has got itself rather too short on the dollar," said Marc Ostwald, global strategist at ADM ISI in London.
Yields on benchmark two-year U.S. Treasury yields are up five basis points over the last week. The gap between those yields and corresponding German debt has widened to more than 200 basis points in recent weeks.
The dollar's bounce was notable after it came under pressure over the last 24 hours on worries over U.S. President Donald Trump's ability to implementing his economic policies after he disbanded two high-profile business advisory councils.
Despite the euro's drop, investors remain bullish about the currency's outlook.
"Most investors are still relatively underinvested in the euro and that unwinding is still going on, while structural factors such as the current account surplus for the euro zone (are) a strong support for the currency," said James Binny, EMEA head of currency, State Street Global Advisors based in London.
The euro has gained more than 11 percent so far this year and is the best performing currency in the G10 FX universe.
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(Reporting by Saikat Chatterjee; additional reporting by Patrick Graham; editing by Mark Heinrich)