FOREX-Euro retreats from three-month high as rise in Bund yields stalls

(Recasts, adds fresh quote)

* Euro eases below $1.1400 as German yields dip

* ECB's Draghi reaffirms commitment to QE

* Upcoming data awaited for clues on U.S. outlook

By Anirban Nag

LONDON, May 15 (Reuters) - The euro fell below $1.14 on Friday, its first drop after three days of gains, as a recent spike in German Bund yields stalled, while dollar buyers eyed U.S. data for clues on whether the economy was recovering from its winter chill.

Traders said speculators have been trimming short positions in the euro this week and the trend was likely to support the currency at lower levels. On the other hand, the dollar index held near four-month lows amid uncertainty about when the Federal Reserve would start raising U.S. interest rates.

The euro fell 0.5 percent to $1.1355, off Thursday's three-month high of $1.1445 but still 9 percent higher than the 12-year low of $1.0457 reached on March 16. That was the day the European Central Bank embarked on its one trillion-euro bond-buying programme, to which President Mario Draghi reiterated his commitment on Thursday.

"Draghi reaffirmed his commitment to QE yesterday and we think the corrective course for the euro has run its course," said Manuel Oliveri FX strategist at Credit Agricole. "There isn't much of an upside left."

Part of the reason for the euro's rebound has been improved euro zone data and rising inflation expectations. In contrast, first-quarter growth in the United States disappointed dollar bulls. Soft retail sales in April has left investors wondering if the Fed would raise rates later this year.

More importantly, the recent global bond market rout narrowed the yield gap between Bunds and U.S. Treasuries, supporting the euro. The gap (NYSE: GPS - news) between 10-year Bunds and Treasuries has shrunk to around 150 basis points, from around 180 bps about a month ago, making the euro more attractive to investors.

German Bund yields have stopped climbing - they were lower on Friday - but the gap remained at 153 basis points.

Traders said upcoming U.S. data will be the main driver for the dollar. U.S. data due later on Friday include industrial production for April and the University of Michigan's preliminary May reading on consumer sentiment.

"Given the markets' sensitivity to the strength of the US activity rebound in the second quarter, even relatively minor data releases are having disproportionate price impacts," said Adam Cole, head of G10 FX strategy at RBC Capital. (additional reporting by Tomo Uetake; Editing by Dominic Evans, Larry King)