Monetary policy view
* Dollar recovers against euro after two sessions of losses
* Fed statement still has weakening effect on dollar (Adds comments, updates prices)
By Sam Forgione
NEW YORK, March 24 (Reuters) - The U.S. dollar rebounded against the euro on Tuesday on persistent bullish sentiment toward the greenback tied to the divergence of monetary policy between the United States and Europe, but the impact of last week's Federal Reserve statement limited its gains.
The dollar recovered against the euro after two straight sessions of losses on the view that the Fed will still hike interest rates this year, while the European Central Bank continues with its bond-buying stimulus program.
Early in Tuesday's session, the euro rose above $1.10 for the first time since March 18, when the Fed released its latest policy statement. Analysts said the dollar will continue to find support as it hits key lows against other currencies, despite being weighed down by the dovish Fed statement, which suggested a less aggressive timeline for hiking rates.
"You cannot say the euro weakening trend or the dollar strengthening trend has been broken," said Joseph Trevisani, chief market strategist at WorldWideMarkets in Woodcliff Lake, New Jersey.
Analysts said traders abstained from making sizable bets on the dollar or euro and instead awaited further economic data releases, which could offer cues on the Fed's timeline for hiking rates.
The dollar sharply pared earlier losses against the euro after data showing U.S. consumer prices rebounded in February. The dollar later retraced losses before recovering.
"The dollar is broadly in a consolidative mode as we try to look for the next important data," said Marc Chandler, global head of currency strategy at Brown Brothers Harriman in New York.
The Swiss franc, meanwhile, hit multi-week highs against the dollar, euro, and sterling. Analysts said selling of the British sterling against the franc after weak British inflation data likely helped the franc gain against the dollar and euro.
The dollar hit a nearly one-month low against the Swiss franc of 0.95360 franc, while the euro hit a more than six-week low against the franc of 1.0422 franc. The dollar last traded down 0.86 percent against the franc at 0.95770 franc.
The euro was last down 0.17 percent against the dollar at $1.09270. The dollar was roughly flat against the yen at 119.700 after earlier hitting a nearly one-month low against the currency of 119.220 yen.
The dollar index, which measures the greenback against a basket of six major currencies, was last up 0.11 percent at 97.140. (Reporting by Sam Forgione, additional reporting by Ahmed Aboulenein in London; editing by Peter Galloway; Editing by Diane Craft)