NEW YORK (Reuters) - The dollar slumped to a six-week low against other major currencies on Monday as markets sorted out the plunge in U.S. Treasury yields last week after the Federal Reserve reiterated that any spike in inflation is likely to be temporary. Improved risk sentiment shown by the recent rally in global stocks to record highs also weighed on the greenback. The dollar index fell 0.58% to 91.082, continuing a downtrend that started at the end of March. With the moves, the British pound gained 1% to come within a hair of $1.40 for the first time since March 18. More evidence of the economic recovery in Britain from the pandemic is expected from data to be released later this week. The greenback’s weakness was pronounced across the board, with the currency hitting multi-week lows against other major peers in the G10 group of currencies, including the Japanese yen, the Swiss franc, the Australian dollar and the New Zealand dollar, and the euro. The moves are the reverse of what was happening in the first three months of the year when the dollar gained against the same major currencies as yields rose on U.S. Treasuries and offered higher returns on the greenback, said Joseph Trevisani, senior analyst at FXSTREET.COM. The degree of the dollar’s weakness during Monday trading seemed to track the yield on the 10-year Treasury which was last up slightly to $1.5994 after having plunged to 1.5280% on Thursday from a one-year high of 1.7760% in March. The dollar index had gained 3.6% in the first three months of the year before turning down. “Indeed, the USD rally is all but distant memory by now and the currency’s underperformance seems to reflect the apparent divergence in the outlook between the slumping UST yields and the rather perky bond yields elsewhere,” said Valentin Marinov, head of G10 FX research at Credit Agricole. “This is almost the exact opposite of the moves we saw in March,” Marinov said. The euro rose above $1.20 for the first time since March 4 to $1.2037 in the afternoon in New York. The European Central Bank meets on Thursday with internal divisions over the pace of bond-buying, extended COVID-19 lockdowns and potential delays to the EU recovery fund forming the backdrop. The market is in a period of consolidation in U.S. yields and the dollar exchange rates, according to Masafumi Yamamoto, the chief currency strategist at Mizuho Securities in Tokyo. The dollar bought 108.135 yen on Monday afternoon and reached its weakest level since March 5. MSCI’s emerging market currency index hit its highest level in a month and last traded 0.15% higher on the day. Fed Governor Christopher Waller said on CNBC on Friday that the U.S. economy “is ready to rip” as vaccinations continue and activity picks up, but a rise in inflation is likely to be transitory, echoing comments from other U.S. central bank officials, including Chair Jerome Powell, over the past week. Their statements have clashed with market expectations that Fed officials will see signs of rising inflation in strong economic data and decide to tighten monetary policy sooner than they have indicated. The currency and bond markets are looking to two events on Wednesday for clues to where interest rates are going: An auction of $24 billion of 20-year U.S. Treasuries and statements from the Bank of Canada about when it might cut bond purchases and allow rates to rise. The Bank of Canada may foreshadow what is coming for U.S. rates by signalling a tightening of monetary policy, said Trevisani. “That’s the direction the Fed is going to have to go, too, eventually,” he said. Bitcoin slipped about 1% to $55,782 on Monday afternoon in New York in a day of relatively steady trading after plunging on Sunday. Data website CoinMarketCap cited a blackout in China’s Xinjiang region, which reportedly powers a lot of bitcoin mining, for the selloff.