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HONG KONG - The euro gained a fraction in early trade on Monday following French President Emmanuel Macron's comfortable Sunday defeat of far-right rival Marine Le Pen, the outcome largely expected by markets and political analysts.

The euro opened higher at $1.0840, was last trading at $1.0807, up 0.12% from Friday's close, but couldn't break far from a two-year low hit last week.

The currency rose 0.14% against sterling to 84.22 pence, hitting a three-week peak in early trade.

With 97% of votes counted, Macron was on course for a solid 57.4% of the vote, interior ministry figures showed. In his victory speech he acknowledged that many people had only voted for him only to keep Le Pen out, and he promised to address the sense of many French that their living standards were slipping.

"Macron's clear victory is likely to reassure the markets that the European dynamic will continue. In the short term, the main logical beneficiary of this election could be the euro, which was still flirting last Friday with two-year lows against the dollar," said Frederic Leroux, a member of the investment team at Carmignac.

"The negative aspect for the markets of this rather comfortable election could however come from a quick decision in favour of a Russian oil embargo, which would exacerbate inflationary pressures and economic slowdown in Europe."

The euro, along with most of its major peers, has been bruised by an upward march by the dollar that is boosted by rising U.S. Treasury yields. Markets are repositioning themselves for an aggressive programme of rate hikes from the U.S. Federal Reserve.

The dollar index was at 101.08 on Monday morning, just shy of a two-year peak of 101.33 hit on Friday.

Sterling was slightly softer against the dollar at $1.28275, after falling 1.4% on Friday to its lowest since November 2020. Weak sales and consumer-confidence data and Bank of England comments earlier in the week signalled a possible slowdown in the expected upward movement of British interest rates.

Among major currencies, the Japanese yen has been the most affected by rising U.S. interest rates, with Japan keeping its benchmark yields pinned down. On Monday morning, the dollar was a tiny bit firmer on the yen at 128.63.

The dollar has gained 11% on the yen so far this year. Last week's 129.4 was the highest for dollar-yen in 20 years.

The Aussie dollar was also under pressure at $0.7233, its lowest against the dollar in a month, while bitcoin was hovering around $39,500, little changed over the weekend.

(Reporting by Alun John; Editing by Bradley Perrett)