new york dec 14 reuters  the us dollar rose again on tuesday after rebounding from a dip that nearly wiped out its gains from the day before as markets jostled with the different paths major central banks are choosing between fighting inflation or the economic drag of the pandemic the us dollar index measuring the currency against major peers was up 02 at 965520 in afternoon trading in new york after having earlier given up much of its monday gain of 03 the rebound came largely at the euros expense as markets digested another report of unexpectedly high us inflation that could push american interest rates much higher and sooner than in europe the dollars safehaven appeal also improved as stock indexes fell in the united states and in europe and as oil dropped on a prediction that the spreading omicron variant of the coronavirus will dent global demand the euro was down more than 02 at 11256 near a oneweek low at 339 pm et 2039 gmt  the contrast between the monetary policies of the us federal reserve and the european central bank is driving the eurodollar exchange rate said ron simpson global currency analyst at action economics in safety harbor florida the fed will update its policy on wednesday and the ecb on thursday read more its like theres no end in sight to the dovishness for the ecb whereas it seems like every meeting the fed is getting a little more hawkish said simpson the fed is expected to indicate on wednesday that it will quicken its taper from bond buying that would open the door sooner for increases in overnight lending rates the dollars gain on tuesday was likely given an extra lift by covering of dollarshort positions after the inflation report and ahead of the two central bank meetings he added i dont think it was so much a matter of initial fresh longdollar positions the latest sign of higher us inflation came earlier on tuesday with data showing that producer prices increased more than expected as supply constraints persisted the data showed the biggest annual gain in at least 11 years read more its clear the fed needs to react to higher inflation said david riley chief investment strategist at bluebay asset management its an environment where its very hard not to be positive on the us dollar markets have been pricing for the fed to wrap up bondbuying around march and proceed with rate hikes read more the british pound gained 01 to 13224 after data showed employers hired a record number of staff in november read more the japanese yen lost ground with the dollar trading at 11373 yen commodityassociated currencies including the australian and canadian dollar  lost to the greenback as brent crude prices dropped toward 73 a barrel the international energy agency iea said the omicron coronavirus variant is set to dent the global demand recovery read more the tension between the dollar and the euro that mirrors fed and ecb choices is dramatically different from the start of the pandemic when central banks tended to make similar moves read more the fed and ecb meetings headline a string of policy decisions this week that also will come from the bank of england the swiss national bank the bank of japan and others while money markets are pricing good odds on a fed rate hike by june  no moves are expected anytime soon from the ecb boj or snb and the omicron threat could force the boe to postpone a rate hike cryptocurrency bitcoin was up 2 at 47789 at 2039 gmt but remains some 30 below record highs reached in early november reporting by david henry in new york and sujata rao in london editing by ed osmond william maclean and jonathan oatis