By Kevin Buckland and Sagarika Jaisinghani
TOKYO (Reuters) - The U.S. dollar gave up early gains on Friday as Treasury yields dipped from near 14-month highs, while investors digested the Federal Reserve's pushback against expectations of any early interest-rate hikes.
The dollar index was down about 0.1% at 91.689 after rising as much as 0.2% in early Asian trading.
The euro gained versus the dollar after posting its worst day in two weeks on Thursday. The British pound rose 0.1% to $1.3951.
The Federal Open Market Committee (FOMC) pledged this week to press on with aggressive monetary stimulus, saying a near-term spike in inflation would prove temporary amid projections for the strongest U.S economic growth in nearly 40 years.
The benchmark U.S. 10-year yield climbed to a more-than-one-year peak of 1.754% overnight before easing to 1.6821%.
"With the Fed looking for the unemployment rate to drop below 5% this year and below 4% in 2023, it (is) difficult to see how long the 10-year bond yield can hold below 2%," said Chang Wei Liang, macro strategist at Singapore-based DBS Bank.
"Overall, the FOMC affirmed our decision on Monday to upgrade the outlook for the dollar to push above 92 towards 94 by mid-year."
The yen dipped briefly after the Bank of Japan widened its target band for the benchmark yield in a decision that was in line with market expectations.
The dollar was last down 0.1% at 108.760 yen after small gains overnight.
"There's no reason for dollar-yen to react to the latest results of the BOJ assessment because it's almost in line with what the media reported in advance," said Masafumi Yamamoto, chief currency strategist at Mizuho Securities.
"For dollar-yen, U.S. Treasury yield change is a much more important driver than the JGB yield change."
The euro was up at $1.1935 after tumbling 0.5% on Thursday.
While AstraZeneca (NASDAQ:AZN) vaccinations are poised to restart in Germany, France and other European nations, the region's growth outlook suffered as Paris went into a month-long lockdown.
In the cryptocurrency market, bitcoin stood at around $57,530 after briefly topping $60,000 again overnight.
It had surged to a record high of $61,781.83 on Saturday, after more than doubling since the start of the year.
"Bitcoin is a momentum trade and it feels like it could go a lot further," said Edward Moya, a New York-based senior market analyst at online FX broker OANDA. "Is it a bubble? Yes. But it can easily go to $100,000 before it comes crashing down."