* Euro down, PMIs weaker than expected
* Fed on track for a March rate hike (Updates prices, market activity; adds comments)
NEW YORK, Feb 21 (Reuters) - The dollar rose to a more than one-week peak on Wednesday, extending its recovery from last week, helped by higher short-term Treasury yields, and as minutes of Federal Reserve's January meeting showed policymakers confident in the need to keep raising interest rates.
The dollar index, which measures the greenback against a basket of six other major currencies, was up 0.37 percent at 90.046, after hitting a high of 90.134 earlier in the session.
A more upbeat take on inflation in the minutes of the Jan. 30-31 policy meeting bolstered expectations for rate hikes. U.S. short-term interest-rate futures continued to reflect firm expectations that the Fed will raise rates three times this year.
"(The minutes) show that officials were firmly on track to raise interest rates again in March," Paul Ashworth, chief economist at Capital Economics, said in a note.
The dollar index initially slipped to a session low right after the release of the minutes but soon recovered.
"The minutes initially read a little bit less hawkish than many were expecting," said Omer Esiner, chief market strategist with Commonwealth Foreign Exchange, in Washington.
"It's worth noting though that since the last Fed meeting we have seen the government approve a very expansionary budget, we saw a higher-than-expected wage component of January's employment report and we saw a higher-than-expected Consumer Price Index for January," Esiner said.
"So, while the minutes are not necessarily reflecting those data, I think the Fed is probably more hawkish today than it was at January's meeting."
The yield on the two-year Treasury note was at 2.270, after hitting a nine-year high of 2.282 earlier in the day.
"Short-term Treasury (yields) have moved up fairly significantly overnight, reaching levels we had seen last during the Lehman crisis," said Sireen Harajli, a currency strategist at Mizuho in New York. "This higher push in yield has been beneficial for the dollar."
The euro edged lower after the release of February's preliminary purchasing managers' survey for the euro zone implied the pace of growth set in January, the fastest in well over a decade, has diminished a little in February.
The euro has been driven by dollar weakness and then the recent recovery, but investors remain long on the common currency in anticipation the European Central Bank will soon begin unwinding its balance sheet.
Sterling was 0.53 percent lower against the dollar, after data showed Britain's unemployment rate rose unexpectedly for the first time in almost two years in the three months to December.
(Reporting by Saqib Iqbal Ahmed; Editing by Steve Orlofsky)