TOKYO Reuters The dollar nursed losses on Thursday, holding near a threeweek low against a basket of currencies as U.S. bond yields pulled back from last months surge with investors buying the Federal Reserves arguments that interest rates can stay low.

The dollar index dipped to a fourweek low of 91.571 overnight and last stood at 91.601.

The euro traded at 1.19845, near its highest level in four weeks and having gained 2.2 so far this month.

The dollar changed hands at 108.93, after hitting a threeweek low of 108.755 on Wednesday.

The dollar has been losing steam a bit in line with falls in U.S. bond yields as the Fed has maintained it dovish stance, said Yujiro Goto, chief currency strategist at Nomura Securities.

Repeated assurances from Fed officials that it will keep interest rates low have helped stabilise U.S. bonds, especially at the short end of the market.

While many investors remain nervous the Fed could change its tone later this year if inflation readings swing much higher than expected, for now they are content to give the Fed the benefit of the doubt.

Tenyear U.S. bond yields eased to 1.636, well below a 14month peak of 1.776 hit late March, reducing the dollars yield attraction.

Fed Chair Jerome Powell said on Wednesday that the U.S. central bank will reduce its monthly bond purchases before it commits to an interest rate increase, a scenario many investors have regarded as a given.

A weaker U.S. dollar also saw commodity currencies supported….