* Trump announcement on Iran nuclear deal key event risk
* Graphic: World FX rates in 2018 tmsnrt.rs/2egbfVh
By Saikat Chatterjee
LONDON, May 8 (Reuters) - The dollar consolidated gains on Tuesday after scaling a 2018 peak in the previous session as investors focused their attention on U.S. President Donald Trump’s decision about the future of an international nuclear agreement with Iran.
Trump is expected to make an announcement on the nuclear deal at 1800 GMT. A U.S. withdrawal from the deal, which eased economic sanctions in exchange for Tehran limiting its nuclear programme, would impact risk sentiment in the broader markets.
“It is an event risk and has the potential to make risk sentiment which is already cautious more unstable,” said Manuel Oliveri, a currency strategist at Credit Agricole in London.
While global attention has been focused on the recent rally in the dollar — the greenback has rallied around 4 percent in the last three weeks — the Japanese yen has held its own against its higher yielding rivals such as the Australian dollar and the Canadian dollar.
On Tuesday, the dollar was broadly steady after rising above 92.97 on Monday as markets further unwound short bets against the greenback built up in recent months pushing the dollar up for three consecutive weeks.
Some analysts such as Commerzbank say a U.S. withdrawal from the deal with Iran could have considerable consequences for the dollar beyond an initial dollar-positive risk-off movement.
“In that case it would become increasingly more attractive to use the U.S. dollar only for direct US deals and to use another currency for other transactions, which could undermine the status of the US dollar as a dominant reserve currency longer term,” they wrote in a note.
Conversely, the euro remained under pressure, stabilising around the $1.19 line as recent data have suggested the stellar growth seen in Europe last year is losing momentum.
But the Japanese yen’s rise against its rivals, particularly the greenback, was checked by the widening interest rate differentials between U.S. yields and most of its rivals. For example, the gap between U.S. yields and German debt remained near three-decade highs of more than 242 basis points.
Elsewhere, the Australian dollar was down a quarter of a percent at $0.7498 following the release of soft domestic retail sales data for March.
Upbeat China trade figures for April helped limit losses for the Aussie, often used as a proxy for China-related trades.
The New Zealand dollar was little changed at $0.7017 . (Reporting by Saikat Chatterjee Editing by Keith Weir)