* Dollar off 6-1/2 month lows
* Sterling recovers after dip on Manchester attack
* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh
(Updates with U.S. market open, changes dateline from LONDON)
By Saqib Iqbal Ahmed
NEW YORK, May 23 The dollar struggled to recover
ground against other major currencies on Tuesday as lingering
U.S. political risk and strong European data kept the greenback
The dollar index, which tracks the greenback against
a basket of six major rivals, was nearly flat on the day at
96.972. The index fell to a more than six month low on Monday,
following its worst week of losses in a year.
"The noise around the political situation in the U.S. is
keeping a lid on the dollar," said Brad Bechtel, managing
director FX at Jefferies in New York.
Worries over U.S. President Donald Trump's recent firing of
FBI Director James Comey, who was overseeing a probe into
possible links between the president's team and Russia, and
concerns about possible delays in Trump's efforts to implement
his economic stimulus plans have recently pressured the dollar.
On Tuesday, U.S. Treasury Secretary Steven Mnuchin said
while he hopes to get tax reform done this year, it will not
happen by August.
The euro was down 0.06 percent against the dollar at
$1.1229. The common currency rose as high as $1.1267, its
highest since Nov. 9, earlier in the session.
"Europe is increasingly looking better on the data side and
you are still getting relief rally related to the French
election," Bechtel said.
Businesses across the euro zone maintained April's
blistering growth rate this month, a survey showed, and German
business morale brightened more than expected in May to hit its
highest on record since 1991.
The euro rose on Monday after comments from German leader
Angela Merkel, who said a euro that was "too weak" was the cause
of Germany's massive trade surplus.
Berlin is likely to hear more grumbling, particularly from a
Washington administration that has made noises about the
dollar's strength, at a meeting of Group of Seven leaders in
Italy this weekend.
Moves on major markets were tight, with the common
denominator still a struggling greenback. The dollar was down
0.12 percent against the yen and 0.16 percent weaker against the
Meanwhile, sterling was up 0.08 percent against the dollar
to $1.3008, recovering ground after falling on a suicide bombing
in the English city of Manchester and concerns over the ruling
Conservative Party's campaign for next month's election putting
the currency on the defensive.
(Reporting by Saqib Iqbal Ahmed; Editing by Chris Reese)