LONDON, April 8 Reuters The dollar paused on Monday as investors trained their sights on U.S. inflation data later this week, while the yen slipped close to 34year lows as traders remained on alert for any potential action in Tokyo to support the weakening currency.

The dollar fluctuated last week as traders digested a mixed bag of U.S. economic data, with a slowdown in services growth followed by unexpectedly strong hiring numbers that prompted the market to pare bets on Federal Reserve rate cuts this year.

The dollar index which tracks the greenback against six major peers was last broadly flat on Monday at 104.35, while U.S. Treasury yields, which reflect interest rate move expectations, pushed higher.

U.S. consumer price inflation for March on Wednesday will be the next big test for dollar strength, while the European Central Bank ECB policy meeting on Thursday is the other main economic marker for big global currencies this week.

The latest developments have increased the risk that the Federal Reserve could lag behind other major central banks when lowering interest rates, currency analysts at MUFG said in a note.

Another upside inflation surprise could trigger a bigger hawkish reassessment of Fed ratecut expectations and open the door for the U.S. dollar to break higher, the note added.

The dollar strengthened 0.17 against the yen on the day to 151.895 , putting it within a whisker of its highest since July 1990.

Japanese Prime Minister Fumio Kishida said…