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By Hideyuki Sano<br><br>TOKYO, Nov 15 (Reuters) - The dollar traded within sight of its highest level in more than 13-1/2 years on Tuesday as bond yields soared on expectations that President-elect Donald Trump's economic policies will fuel inflation.<br><br>The dollar index , which measures the greenback's value against a basket of six major currencies, last traded at 99.883. On Monday, it had risen as high as 100.22.If the index climbs above the December 2015 peak of 100.51, it would reach its highest level since April 2003.<br><br>Since Trump won the U.S. presidential last week, the 10-year U.S. bond yield has jumped about 0.40 percentage point to 10-month highs as his policies of heavy fiscal spending and trade protectionism are seen likely to stoke inflation.<br><br>"Everyone knows that there are questions over how much of his campaign promises Trump can actually deliver. There could be friction between the White House and the Congress down the road," said Kazushige Kaida, head of forex trading at State Street in Tokyo.<br><br>"But market players are not political scientists. For now, they have decided to jump on this euphoria," he added.<br><br>The dollar eased 0.3 percent to 108.12 yen, pulling back a bit from Monday's five-month high of 108.545 yen. The U.S. currency is still up 6.8 percent from a low touched last Wednesday.<br><br>"Given the massive increase in U.S. bond yields, the dollar is within sight of testing 110 yen," said Minori Uchida, chief currency analyst at the Bank of Tokyo-Mitsubishi UFJ.<br><br>"Even though U.S. bond yields rose sharply, U.S. stock prices were firm. As long as the U.S. share markets are supported, I suspect the dollar's appreciation will continue," he added.<br><br>Technical charts also point to the potential for further dollar strength against the yen, said Masashi Murata, [http://www.Wikipedia.org/wiki/currency%20strategist currency strategist] for Brown Brothers Harriman in Tokyo.<br><br>The dollar could rise towards levels seen in May, now that it has risen above its July peak as well as its 200-day moving average, he said.<br><br>"The dollar could reach levels around 111.50 yen by year-end," Murata said.<br><br>The euro edged up 0.1 percent to $1.0751, taking a breather after dropping to as low as $1.0709 on Monday, its lowest level since December.<br><br>The euro is also undermined by growing worries Italian Prime Minister Matteo Renzi may not stay on if he loses a referendum on constitutional reform on Dec. 4.<br><br>Polls show the "no" vote firmly in the lead, with Trump's unexpected victory seen bolstering support for Renzi's populist rivals in the 5-Star Movement.<br><br>Still, rises in implied volatilities on currency pairs such as euro/dollar and dollar/yen suggest market players are also wary of the possibility of a sudden fall in the dollar despite its spectacular gains over the last few days, said State Street's Kaida.<br><br>The euro/dollar one-month implied volatility rose to almost 11 percent on Tuesday, back near its highest level since late June, while implied volatility of the dollar/yen rose to almost 13 percent from last week's low around 10.5 percent.<br><br>The onshore Chinese yuan fell to its weakest level in nearly eight years on Tuesday, breaking through 6.85 per dollar. (Reporting by Hideyuki Sano; Additional reporting by Masayuki Kitano in SINGAPORE; Editing by Simon Cameron-Moore)<br><br>If you cherished this report and you would like to obtain extra data regarding [https://www.youtube.com/watch?v=-TJP8744jTQ افضل شركة فوركس] kindly take a look at our own site.