* Dollar rallies on Paulson, Plosser comments

* Inflation may call for higher rates, sooner-Plosser

* Investors continue to focus on earnings results (Recasts, adds comments, byline, updates prices)

By Wanfeng Zhou

NEW YORK, July 22 (Reuters) - The dollar rallied on Tuesday, after a Federal Reserve official suggested that U.S. rates may have to rise to stem inflation and a top Treasury official repeated that a strong currency is in the interest of the country.

Treasury Secretary Henry Paulson reiterated on Tuesday that a strong dollar is important to U.S. interests and the underlying strength of the economy, as well as policies aimed at shoring up confidence, would be reflected in currency markets.

At the same time, Philadelphia Fed President Charles Plosser said rising inflation could force the Fed to start raising interest rates even before labor and financial markets recover. For more see [ID:nN22196417].

"U.S. officials are out in force this morning talking up the dollar and attempting to restore some stability in the financial markets," said Kathy Lien, chief strategist, at DailyFX.com.

"With U.S. Treasury Secretary Paulson saying 'a strong dollar is really very important' and Fed President Plosser calling for a rate hike before the economy turns around, it is not surprising to see the euro below $1.59," she added.