* Yen at post-intervention low; euro/yen soars
* Japan repatriation expectations seen overstated
* Hawkish chatter helps lift US yields
* Fed still seen lagging ECB in rate hike arena
(Recasts, updates prices, adds detail, comment)
By Steven C. Johnson
NEW YORK, March 29 (Reuters) - Rising U.S. bond yields on
Tuesday lifted the dollar above 82 yen for the first time since
Japan's recent currency intervention, and technical indicators
suggested the greenback may be poised to extend those gains.
The euro also rose to its highest level against the yen
since May as markets braced for higher euro zone interest
rates. But the single currency was flat against the dollar as
another Federal Reserve official mused about the need to
tighten monetary policy.
The dollar rose to 82.51 yen <JPY=>, its highest in more
than two weeks and above the 81.98 peak of March 18, the day
Japanese authorities intervened to stop runaway yen gains.
A wider gap between U.S. and Japanese yields helped, with
the two-year U.S. Treasury yield up eight basis points at 0.81
percent. It was up 21 basis points since March 15.
A dollar close above 81.50 yen in coming days could signal
a re-test of 83.30 yen, a level hit immediately after the March
11 earthquake, followed by the February high of 83.98, said BNP
Paribas technical strategist Andrew Chaveriat.
"The 82.25-82.50 area is key, and if we get above there,
you could see a substantial retracement of the overall February
decline," he said.
The euro rose 1 percent to 116.24 yen <EURJPY=R>, a
10-1/2-month high.
The yen hit a record high after the earthquake and tsunami
on speculation the diaster would force Japanese investors to
liquidate overseas assets and bring money home.
But Steven Englander, head of G10 strategy at Citigroup,
said "it is becoming increasingly clear that repatriation flows
(to Japan) are not panning out and if anything will be
limited."
He said recent Bank of Japan data suggests investors' share
of foreign assets was already low before the quake.
FED SEEN LAGGING ECB
A steady rise in U.S. yields gained traction this week as
several Fed policymakers said the central bank would have to
start tightening monetary policy soon to avoid inflation.
St. Louis Fed President James Bullard, a non-voting member
of the Fed's rate-setting committee, said Tuesday the U.S.
economy was strong enough to curtail the Fed's $600 billion
bond-buying program by $100 billion [].
That weakened the euro briefly, though it recovered from
$1.4045 to trade up 0.1 percent at $1.4096 <EUR=>.
But analysts said markets still expect the ECB to beat the
Fed by hiking rates next week and have noted that Fed officials
do not all agree.
Chicago Fed President Charles Evans, unlike Bullard a
voting member, said late Monday that the Fed should complete
its bond-buying program as planned. []
"We do need to see a shift from the Fed (for the dollar to
rally), but not just from the known hawks," said Vassili
Serebriakov, senior currency strategist at Wells Fargo.
However, if the euro were to close below $1.3994, an
ascending channel base, that could signal a significant price
correction, said RBC Capital Markets strategist George Davis.
That could expose $1.3754, followed by the February low of
$1.3428, he said.
On the upside, heavy options-related barriers around
$1.4250 were expected to cap gains, but a break of that level
may see a test of the November high of $1.4283.
(Additional reporting by Julie Haviv; Editing by Dan Grebler)
