By Harry Robertson and Rae Wee

LONDON/SINGAPORE (Reuters) - The dollar rose in somewhat calmer trading on Tuesday, after tumbling on Monday following the collapse of Silicon Valley Bank (SVB), as investors waited for the release of U.S. consumer inflation data later in the day.

Tuesday's consumer price index (CPI) figures have the potential to drive further volatility in global markets, coming a day after fears of a potential banking crisis caused traders to rapidly scale down their expectations for Federal Reserve rate hikes.

The euro was last 0.36% lower at $1.069 as the greenback bounced. It hit a one-month high of $1.075 on Monday and rose 0.85% across the session.

The dollar was up 0.79% to 134.25 yen, reversing some of Monday's 1.4% slide.

"Essentially it's a very, very nervous market," said Alvin Tan, head of Asia FX strategy at RBC Capital Markets.

"We have seen some retracement of the dollar's losses overnight, but it's quite partial.

"Ahead of us of course is the CPI reading today, which is quite important because it's basically the last data point before the (Fed decision) next week."

Over the weekend, U.S. authorities launched emergency measures in response to SVB's collapse, promising to protect depositors in a bid to shore up banking confidence. U.S. President Joe Biden on Monday vowed to take action to ensure the safety of the banking system.

STOCKS TUMBLING

Yet SVB's demise - the largest bank failure since the 2008 financial crisis - sent bank stocks tumbling in Europe and the United States on Monday and in Asia on Tuesday.

Bond yields plunged on Monday as investors stampeded into safe assets and rapidly reconsidered the path of interest rates.

Pricing in derivatives markets on Tuesday showed traders see a 35% chance the Fed leaves rates on hold on March 22 and a 65% chance of a 25 basis point (bp) hike. Just a week ago, a 50 bp increase was seen as most likely.

The rapid drop in bond yields pulled down the dollar on Monday, despite its status as a safe asset, analysts said.

Yet the , which measures the currency against six peers, rose 0.3% to 104 on Tuesday, partially reversing Monday's 0.94% fall.

Graphic: Euro to dollar- https://fingfx.thomsonreuters.com/gfx/mkt/klpygnxoopg/Screenshot%202023-03-14%20075549.png

Britain's pound was down 0.28% to $1.215, after jumping 1.22% on Monday. Data on Tuesday showed UK pay growth slowed in the three months to January.

The U.S. CPI data is expected to show that inflation cooled to 6% year-on-year in February, from 6.4% in January. Investors will keep a beady eye on the core reading, which strips out volatile food and energy prices and is closely watched by the Fed.

"A strong CPI print would be very confusing for the market, given that it's almost priced out a rate hike since last week," said RBC's Tan.

Goldman Sachs (NYSE:) analysts on Sunday said they no longer expect the Fed to deliver a rate hike at its March meeting in light of the recent stress, while Nomura forecast that the central bank will cut interest rates and hit the brakes on quantitative tightening.

The dollar was up 0.17% to 0.914 Swiss francs on Tuesday, after dropping 1.04% against the safe-haven currency on Monday.

The Australian dollar was down 0.11% at $0.666.