(Updates to U.S. morning)

By Saqib Iqbal Ahmed

NEW YORK, June 17 (Reuters) -

The dollar was modestly weaker against the euro on Monday,

as the common currency recovered from the more than one-month

lows hit last week driven by political turmoil in Europe.

The euro was up 0.1% to $1.0718 on Monday,

rebounding from the six-week low of $1.066775 touched last week

following news of a snap parliamentary election in France.

European markets have been under pressure after

President Emmanuel Macron called for a

snap election

following a trouncing of his ruling centrist party by

Marine Le Pen's eurosceptic National Rally in the European

parliament elections.

Investors have been contemplating the risk of a budget

crisis at the heart of the euro area, as far-right and leftist

parties gain momentum ahead of France's snap parliamentary

election, pressuring Macron's centrist administration

Le Pen sought to allay some of those fears over the weekend,

saying she would not seek Macron's resignation and that she is

"respectful of institutions," in an interview with Le Figaro.

Even after the French financial markets endured a brutal

sell-off late last week, European Central Bank policymakers have

no plans to discuss emergency purchases of French bonds, five

sources told Reuters.

"As French markets have begun to stabilize a bit since

last week the euro has responded with a slight touch of

recovery," Helen Given, FX trader at Monex USA in Washington,

said.

Given, however, said that the trend remained in favor of

the dollar.

"If U.S. retail sales come in weaker than expected

tomorrow, as most data for the U.S. has been in the last few

sessions, we could see a more substantial turnaround, but the

underlying dynamic for the pair is driven very heavily by

geopolitics at the moment," she said.

U.S. import prices fell for the first time in five

months in May. The unexpectedly benign report from the Labor

Department on Friday combined with other recent data showing

tame inflation readings has helped keep a September interest

rate cut from the Federal Reserve on the table.

The dollar index, which tracks the U.S. currency

against a basket of six others, was about flat at 105.52, around

its highest since May 2.

The Fed published updated projections last week that showed

the median forecast from all 19 U.S. central bankers was for a

single interest rate cut this year.

Minneapolis Federal Reserve President Neel Kashkari said on

Sunday it was a "reasonable prediction" that the U.S. central

bank would cut interest rates once this year and wait until

December to do it.

The pound slipped 0.13% to $1.26715 on Monday, inching close

to the 1-month low of $1.26575 touched in the previous session

as traders await a policy meeting by the Bank of England this

week.

Britain's inflation pressures still appear too hot for

the Bank of England to cut rates at its June 20 meeting, with a

majority of economists polled by Reuters forecasting the first

cut would not come until Aug. 1.

Meanwhile, the yen remained pinned near a 34-year low

against the dollar after the Bank of Japan on Friday pushed cuts

to bond buying amounts. The dollar was last up 0.3% to 157.895

yen.

Traders remain on watch for signs Japanese authorities might

intervene to prop up the yen.

"All the fundamentals for the pair are in the favor of USD

at the moment, and though some volatility does remain, the

general trajectory has been more steady than we saw in March and

April," Monex's Given said.

"I'd expect to see rhetoric from currency officials heat

up around the 160 mark, but as it stands now it would take a lot

for BoJ officials to finance another intervention - at a point,

it might no longer be worth it," she said.