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FOREX-Dollar dips as Yellen gives no rate hike timing

* Dollar erases gains as bets fall on imminent U.S. rate hike

* Falling U.S. yields bog down greenback

* Approval of Greek reform supports euro (Updates market action, adds quote)

By Richard Leong

NEW YORK, Feb 24 (Reuters) – The dollar weakened slightly against a basket of currencies on Tuesday, erasing earlier gains as Federal Reserve Chair Janet Yellen offered no commitment as to when the U.S. central bank might raise interest rates.

The euro found support after euro zone partners approved Greece’s reform plan, a requirement for the cash-strapped nation to receive a four-month extension to its bailout.

A dollar rally has paused in recent days in the wake of weaker-than-expected data on the world’s biggest economy and as investors awaited clues this week from Yellen’s testimony to two congressional panels.

“The testimony is not giving any concrete timing on … a rate hike. It’s very cautious and very couched,” said Boris Schlossberg, managing director of FX strategy at BK Asset Management in New York.

In the currency market, some traders have bet the Fed might end its long-standing near-zero rate policy as early as June. Others anticipate a rate increase later this year, if at all, due to weak U.S. inflation and a sluggish global economy.

“If economic conditions continue to improve, as the Committee anticipates, the Committee will at some point begin considering an increase in the target range for the federal funds rate on a meeting-by-meeting basis,” Yellen told the Senate Banking Committee.

Tuesday’s data on U.S. home prices and the services sector supported the view of an ongoing U.S. expansion. However, a measure of consumer confidence fell.

Because Yellen gave no sign that a rate hike is imminent, investors jumped back into U.S. Treasuries, sending two-year yields to 2-1/2-week lows. This further reduced the appeal of the dollar.

An index of the dollar’s value versus a group of six currencies was down 0.11 percent at 94.463 after being up 0.4 percent.

The greenback initially posted a two-week high against the yen shortly after Yellen’s comments at 119.84 yen. Those gains faded and it last traded at 118.88, up 0.08 percent.

The euro rebounded from losses against the greenback on developments on Greece and Yellen’s perceived dovish speech. It was up 0.02 percent at $ 1.1337, recovering from a session low of $ 1.1288. It was 0.09 percent higher against the yen at 134.78 yen.

While Greece obtained a temporary financial lifeline, doubts about its ability to solve its debt problem persist.

“We will revisit these issues again this summer. Ultimately, it’s difficult for Greece to repay its debt,” said Omer Esiner, chief market strategist at Commonwealth Foreign Exchange in Washington.

(Additional reporting by Patrick Graham in London; Editing by James Dalgleish)

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