* Benchmark Treasury yield rose past 1.7% to new 13-month peak
* Yen weakens briefly after BOJ allows target yield more leeway
* Bitcoin regroups around $58,000 after topping $60,000 overnight
By Kevin Buckland and Sagarika Jaisinghani
TOKYO, March 19 (Reuters) - The safe-haven U.S. dollar held firmer on Friday, supported by higher Treasury yields and falling stock markets, as investors digested the Federal Reserve's pushback against expectations of any early interest-rate hikes.
The dollar index =USD was slightly higher following a 0.5% jump from Thursday that was the most in two weeks.
The benchmark U.S. 10-year yield US10YT=RR climbed to a more than one-year peak of 1.754% overnight before easing to 1.706%, while Asian stocks followed Wall Street lower.
The yen dipped briefly after the Bank of Japan widened its target band for the benchmark yield in a decision that was in line with market expectations. Federal Open Market Committee (FOMC) pledged this week to press on with aggressive monetary stimulus, saying a near-term spike in inflation would prove temporary amid their projections for the strongest U.S economic growth in nearly 40 years.
"After some navel gazing," bond investors "concluded that the Fed is not (posing) any challenges or discomfort for longer-dated UST yields to keep pushing higher," National Australia Bank's senior FX strategist Rodrigo Catril wrote in a client note.
"The USD regained its mojo."
The greenback was flat at 108.895 yen JPY=EBS , adding to small gains overnight.
Following the BOJ's decision to widen the target band for the 10-year Japanese government bond yield to 25 basis points around 0% from 20 basis points previously, the yen briefly weakened past 109 per dollar, before retracing all of that move.
"There's no reason for dollar-yen to react to the latest results of the BOJ assessment because it's almost in line with what the media reported in advance," said Masafumi Yamamoto, chief currency strategist at Mizuho Securities.
"For dollar-yen, U.S. Treasury yield change is a much more important driver than the JGB yield change."
The euro EUR=EBS was slightly weaker at $1.1915, extending Thursday's 0.5% tumble.
While AstraZeneca (NASDAQ:AZN) vaccinations are poised to restart in Germany, France and other European nations, the region's growth outlook was dinged as Paris went into a month-long lockdown. British pound GBP=D3 sank 0.1% to $1.3913 after weakening 0.3% a day earlier, as the Bank of England warned the outlook for Britain's recovery remained unclear, dampening some speculation the bank would signal a more confident outlook. the cryptocurrency market, bitcoin BTC=BTSP stood at around $57,800, as it seesawed after briefly topping $60,000 again overnight.
It had surged to a fresh record high of $61,781.83 on Saturday, after more than doubling since the start of the year.
"Bitcoin is a momentum trade and it feels like it could go a lot further," said Edward Moya, a New York-based senior market analyst at online FX broker OANDA.
"Is it a bubble? Yes. But it can easily go to $100,000 before it comes crashing down."
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Currency bid prices at 409 GMT Description
RIC
Last
U.S. Close Pct Change
YTD Pct
High Bid
Low Bid
Previous
Change
Session
Euro/Dollar
EUR=EBS
$1.1914
$1.1916
-0.03%
-2.50%
+1.1921
+1.1902 Dollar/Yen
JPY=D3
108.8900
108.9100
-0.04%
+5.40%
+109.1170 +108.8600 Euro/Yen
EURJPY=
129.74
129.76
-0.02%
+2.22%
+129.9800 +129.7000 Dollar/Swiss
0.9271
0.9274
-0.01%
+4.82%
+0.9284
+0.9273 Sterling/Dollar GBP=D3
1.3913
1.3932
-0.12%
+1.85%
+1.3931
+1.3893 Dollar/Canadian CAD=D3
1.2499
1.2486
+0.12%
-1.83%
+1.2510
+1.2484 Aussie/Dollar
AUD=D3
0.7743
0.7762
-0.23%
+0.66%
+0.7762
+0.7724 NZ
NZD=D3
0.7165
0.7168
-0.03%
-0.21%
+0.7171
+0.7151 Dollar/Dollar
All spots FX= Tokyo spots AFX= Europe spots EFX= Volatilities FXVOL= Tokyo Forex market info from BOJ TKYFX
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