* Dollar/yen pulls back from 10-month high
* Euro adds to gains made on higher bund yields, Italy relief
* Higher crude oil prices buoy commodity-linked currencies
By Shinichi Saoshiro
TOKYO, Dec 13 (Reuters) - The dollar eased against the yen on Tuesday, coming off a 10-month high, as a surge in Treasury yields was tempered for the time being.
The U.S currency was also capped by the prevailing wait-and-see mood ahead of the Federal Reserve’s two-day policy meeting starting later in the day.
The dollar was down 0.2 percent at 114.850 yen.
It climbed overnight to as far as 116.120 on Monday, its highest since early February as the benchmark 10-year Treasury yield popped above the 2.5 percent threshold to a level unseen since September 2014 as oil rallied. The greenback, however, retraced its gains as Treasury yields ended Thursday significantly below their peaks.
The euro was marginally higher at $1.0640. The common currency had gained 0.7 percent overnight, helped by higher German bund yields and on relief as Rome was seen ready bail out Italian bank Monte dei Paschi di Siena.
“The dollar will continue to have 120 yen in its sights. But a 25 basis points rate hike by the Fed is also significantly priced in, and the dollar is likely to be locked in between trend following bulls and profit-takers,” said Masafumi Yamamoto, chief forex strategist at Mizuho Securities in Tokyo.
Fed fund futures show a 97 percent probability that the Fed will lift rates by a quarter of a percentage point, according to the CME Group.
Moreover, the markets will be eager to know if the U.S. election resulting in Donald Trump’s victory has reshaped the central bank’s growth and inflation outlook.
Elsewhere, the gain in crude oil prices buoyed commodity-linked currencies.
The Canadian dollar was little changed at C$1.3128 per dollar following an overnight rise to a 2-month peak of C$1.3110.
The Australian dollar was steady at $0.7496 after adding 0.6 percent the previous day.
Oil rose to an 18-month high on Monday after OPEC and some non-members reached their first deal since 2001 to jointly reduce output to tackle global oversupply. (Reportng by Shinichi Saoshiro; Editing by Eric Meijer)