* Dollar index steps back from seven-month peak
* Euro off lows but buffeted by ECB rate cut risk
* China inflation data next up
By Ian Chua
SYDNEY, Nov 10 (Reuters) - The dollar hovered just below a seven-month peak against a basket of major currencies early on Tuesday, having consolidated its payrolls-inspired rally in a subdued session overnight.
The dollar index .DXY last stood at 99.033, drifting down from Friday's peak of 99.345, a high not seen since mid-April. Against the yen, the greenback fetched 123.15 yen JPY= , just off a 2-1/2-month high of 123.60.
The euro traded at $1.0753 EUR= , having been as low as $1.0704 on Friday. Versus the yen, the common currency stood at 132.20 yen EURJPY=R , drifting off a six-month low of 131.45 plumbed recently.
Not helping the euro, four governing council members said a consensus is forming at the European Central Bank to take one of its benchmark interest rates deeper into negative territory in December.
In contrast, the Federal Reserve is now considered very likely to tighten U.S. monetary policy next month for the first time in nearly a decade following Friday's solid payrolls data.
Even Eric Rosengren, the dovish president of the Boston Fed, pointed to December as an appropriate time to begin raising rates.
In a speech on Monday, Rosengren said it was now reasonable to ask whether the current level of near-zero rates was necessary given he expects the economy to continue expanding at above its potential rate of around 2 percent.
"We think USD gains have further to run, but with the Fed also sensitive to headwinds created by currency strength, we think gains are likely to be limited in scope," analysts at BNP Paribas (PA:BNPP) wrote in a note to clients.
Commodity currencies also regained their footing after Friday's slide against the greenback. The Australian dollar stood at $0.7050, recovering from a one-month trough of $0.7016. Its kiwi peer was at $0.6533 NZD=D4 , off a one-month low of $0.6499.
The immediate fortunes of the Antipodean currencies depend on a slew of Chinese data due over the next 48 hours, with inflation expected later in the day. Industrial output and retail sales figures will feature on Wednesday. (Editing by James Dalgleish)