* Benchmark Treasury yield rose past 1.7% to new 13-month peak * Yen buoyed by report BOJ to be more flexible with yield target * Bitcoin sinks toward $56,000 after topping $60,000 overnight By Kevin Buckland TOKYO, March 19 (Reuters) - The safe-haven U.S. dollar strengthened again on Friday, supported by higher Treasury yields and falling stock markets, as investors continued to digest the Federal Reserve"s pushback against expectations of any early interest-rate hikes. The dollar index added 0.1%, extending a 0.5% jump from Thursday that was the most in two weeks. The benchmark U.S. 10-year yield climbed to a more than one-year peak of 1.754% overnight before easing to 1.715%, while Asian stocks followed Wall Street lower. The Federal Open Market Committee (FOMC) pledged this week to press on with aggressive monetary stimulus, saying a near-term spike in inflation would prove temporary amid their projections for the strongest U.S economic growth in nearly 40 years. The next focus for the currency market will be the Bank of Japan"s policy decision Friday, accompanied by results of a comprehensive policy review. "After some navel gazing," bond investors "concluded that the Fed is not (posing) any challenges or discomfort for longer-dated UST yields to keep pushing higher," National Australia Bank"s senior FX strategist Rodrigo Catril wrote in a client note. "The USD regained its mojo." The greenback gained 0.1% to 109.04 yen, adding to small gains overnight. The yen got some support from a Nikkei report on Thursday that the BOJ was expected to slightly widen an implicit band in which it allows long-term interest rates to move around its 0% target. The euro slipped 0.1% to $1.1908, extending Thursday"s 0.5% tumble. While AstraZeneca vaccinations are poised to restart in Germany, France and other European nations, the region"s growth outlook was dinged as Paris went into a month-long lockdown. The British pound sank 0.2% to $1.3903 after weakening 0.3% a day earlier, as the Bank of England warned the outlook for Britain"s recovery remained unclear, dampening some speculation the bank would signal a more confident outlook. In the cryptocurrency market, bitcoin weakened to around $56,703 in early Asian trading, seesawing after breifly topping $60,000 again overnight. It had surged to a fresh record high of $61,781.83 on Saturday, after more than doubling since the start of the year. "Bitcoin is a momentum trade and it feels like it could go a lot further," said Edward Moya, a New York-based senior market analyst at online FX broker OANDA. "Is it a bubble? Yes. But it can easily go to $100,000 before it comes crashing down." ======================================================== Currency bid prices at 116 GMT Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Euro/Dollar $1.1906 $1.1916 -0.08% -2.55% +1.1921 +1.1904 Dollar/Yen 109.0650 108.9100 +0.11% +5.56% +109.0920 +108.9300 Euro/Yen 129.85 129.76 +0.07% +2.31% +129.9200 +129.7700 Dollar/Swiss 0.9282 0.9274 +0.09% +4.92% +0.9283 +0.9273 Sterling/Dollar 1.3901 1.3932 -0.19% +1.79% +1.3931 +1.3900 Dollar/Canadian 1.2502 1.2486 +0.14% -1.81% +1.2505 +1.2484 Aussie/Dollar 0.7734 0.7762 -0.32% +0.57% +0.7762 +0.7736 NZ 0.7154 0.7168 -0.17% -0.35% +0.7171 +0.7155 Dollar/Dollar All spots Tokyo spots Europe spots Volatilities Tokyo Forex market info from BOJ (Reporting by Kevin Buckland; editing by Richard Pullin)