* Euro falls back after surging last week
    * Analysts say ECB turn is big deal for single currency
    * Dollar edges down, traders await Thursday CPI data

 
    By Herbert Lash
    NEW YORK, Feb 7 (Reuters) - The dollar and the euro both eased on Monday after European Central Bank President
Christine Lagarde calmed market expectations of a quick hike in interest rates that pushed regional bond yields in
Europe up to multi-year highs. 
    There is no need for big monetary policy tightening in the euro zone as inflation is set to decline and could
stabilize around the ECB's target of 2%, Lagarde told a European Parliament hearing.
    Last week the ECB opened the door to a rate hike later in 2022 as inflation risks rose, while data showing an
unexpected jump in U.S. jobs created in January also raised speculation of a faster timetable for the Federal Reserve to
hike rates.
    The new rate expectations for both the Fed and ECB pit the dollar and euro against each other as to which will gain
an upper hand. U.S. consumer price data to be released on Thursday is poised to be a key data point determinant. 
    "The euro-dollar will be in a kind of tug of war between these two forces, but ultimately with CPI in the U.S.,
we're probably due for a bit more of a dollar recovery," said Kathy Lien, a managing director at BK Asset Management. 
    A Reuters poll of economists showed they expect year-over-year CPI to have climbed to 7.3% in January.
    The major currencies traded in a tight range near break-even. The dollar index fell 0.045%, with the euro
 down 0.03% to $1.1443.
    The ECB last week got the ball moving in a positive direction for the euro, said Joe Manimbo, senior market analyst
at Western Union Business Solutions. 
    "Now the focus has shifted to U.S. inflation, which the market will use to figure out whether the Fed goes by 25
basis points or 50 basis points next month," Manimbo added.
    Markets have now priced in a one-in-three chance the Fed might hike by a full 50 basis points in March, and
a reasonable chance rates will reach 1.5% by year end.           
    The European common currency hit its highest since mid-January on Friday, driven by the hawkish turn from
the ECB.
    Not everyone is convinced of a hawkish ECB tilt.
    "We don't believe the ECB is bracing for a sudden acceleration of tightening. We still see the Fed as being on track
to move well ahead of the ECB, providing support for the dollar," said Mark Haefele, chief investment officer at UBS
Global Wealth Management.
    Haefele said he expects the euro to fall to $1.10 by year-end and the dollar gaining versus the Swiss franc to
finish the year at 0.98 francs per dollar, from 0.92 currently.
    The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was down
2.4 basis points at 1.298%. The yield on two-year German bonds fell by 3.5 bps to -0.29%, after hitting its highest
since September 2015 at -0.21%.
    The Japanese yen strengthened 0.13% versus the greenback at 115.06 per dollar, while sterling was last
trading at $1.3536, up 0.05% on the day. 
    Bitcoin rose to a four-week high, driven in part by liquidation of some short positions that have accumulated
in the virtual currency's recent three-month downtrend.
    The cryptocurrency climbed 8.94% to $44,279.81, after jumping 11% late on Friday. 
        
========================================================
    Currency bid prices at 3:00PM (2000 GMT)
 Description        RIC          Last             U.S. Close   Pct Change       YTD Pct         High Bid     Low Bid
                                                   Previous                      Change                      
                                                   Session                                                   
 Dollar index                    95.3960          95.4410      -0.04%           -0.279%         +95.6350     +95.3530
 Euro/Dollar                     $1.1442          $1.1451      -0.07%           +0.66%          +$1.1474     +$1.1415
 Dollar/Yen                      115.0650         115.2100     -0.12%           -0.04%          +115.3750    +114.9150
 Euro/Yen                        131.66           131.90       -0.18%           +1.03%          +132.1300    +131.2700
 Dollar/Swiss                    0.9234           0.9254       -0.22%           +1.23%          +0.9262      +0.9223
 Sterling/Dollar                 $1.3537          $1.3525      +0.10%           +0.10%          +$1.3550     +$1.3492
 Dollar/Canadian                 1.2662           1.2769       -0.82%           +0.16%          +1.2756      +1.2661
 Aussie/Dollar                   $0.7128          $0.7078      +0.73%           -1.92%          +$0.7130     +$0.7066
 Euro/Swiss                      1.0565           1.0592       -0.25%           +1.89%          +1.0604      +1.0551
 Euro/Sterling                   0.8451           0.8464       -0.15%           +0.60%          +0.8478      +0.8439
 NZ Dollar/Dollar                $0.6639          $0.6615      +0.38%           -2.99%          +$0.6641     +$0.6602
 Dollar/Norway                   8.7785           8.7805       +0.20%           -0.13%          +8.8555      +8.7800
 Euro/Norway                     10.0463          10.0676      -0.21%           +0.33%          +10.1168     +10.0300
 Dollar/Sweden                   9.1269           9.1532       -0.33%           +1.21%          +9.1736      +9.1168
 Euro/Sweden                     10.4439          10.4785      -0.33%           +2.05%          +10.4887     +10.4360
 
    

    
 (Reporting by Herbert Lash; Additional reporting by Tommy Wilkes in London; 
Editing by Andrea Ricci and Alison Williams)