TOKYO/SINGAPORE, Aug 3 (Reuters) - The dollar clung on in choppy trade on Wednesday, after its biggest surge for weeks as Federal Reserve officials talked up the potential for further aggressive interest rate hikes.
The U.S. dollar index, which gauges the currency against six major peers, wobbled about 0.3% lower by the Asian afternoon to 106.120, amid a hint of relief that House Speaker Nancy Pelosi's visit to Taiwan brought few surprises.
The euro inched 0.2% higher to $1.1085, though it remains under pressure, while the yen clawed back a little of its overnight drop at rose 0.3% to 132.71 per dollar.
Pelosi's arrival in Taiwan, which China considers a breakaway province, prompted anger in Beijing, with warplanes buzzing the Taiwan Strait and the announcement of live-fire military drills -- though investors felt this was expected.
"The market got a bit more relaxed, perhaps over the U.S.-China situation." said Moh Siong Sim, currency strategist at Bank of Singapore. "I think the market was bracing probably for a worse outcome, maybe no news is good news."
On Tuesday, Fed officials Mary Daly and Charles Evans signalled that they and their colleagues remain resolute and "completely united" over getting rates up to a level that will more significantly curb economic activity.
The comments by "the normally very dovish Daly" and "the equally very dovish Evans" helped yields and the dollar higher, and the dollar index could top 108 in the next few weeks, according to Kristina Clifton, a strategist at Commonwealth Bank of Australia, writing in a note to clients.
Benchmark 10-year Treasury yields, were steady on Wednesday after leaping nearly 14 basis points overnight.
Sterling edged 0.2% higher to $1.2180, while the Antipodeans were pinned near Tuesday's lows and seem to be taking a breather from a month-long rally.
The Australian dollar slumped on Tuesday after the central bank opened the door to a slowdown or pause in the pace of future hikes. It was last steady at $0.6930.
The New Zealand dollar slipped after a surprise rise in unemployment also weighed on hike expectations. It was last at $.06255.