By Karen Brettell

NEW YORK (Reuters) -The dollar bounced off a 14-month low against the euro on Wednesday in choppy trading, but investors held onto bets that the Federal Reserve will make another large interest rate cut at its November meeting on weakening labor optimism.

The yuan also eased on growing doubts about the impact of a new round of Chinese stimulus and after the initial rally on the news was seen as overdone.

The greenback tumbled on Tuesday after data showed that U.S. consumer confidence dropped by the most in three years in September amid mounting fears over the labor market.

“The narrowing in the labor market differential, which is sort of indicative of demand and supply conditions in the employment market, was a very bad omen for the U.S. economy,” said Karl Schamotta, chief market strategist at Corpay in Toronto.

“Markets are interpreting this as a sign that the Federal Reserve is very likely to deliver a second emergency-sized cut at its November meeting,” he added.

Traders are now pricing in 59% odds of a 50-basis point cut at the Fed’s Nov. 7 meeting, up from 37% a week ago, and a 41% chance of a 25 basis point reduction, according to the CME Group’s FedWatch Tool.

The Fed last week kicked off an anticipated series of interest rate cuts with a larger-than-usual half-percentage-point reduction that Fed Chair Jerome Powell said was meant to show policymakers' commitment to sustaining a low unemployment rate now that inflation has eased.

Data on Wednesday showed that sales of new U.S. single-family homes fell less than expected in August.

This week's main U.S. economic focus will be the Personal Consumption Expenditures index for August on Friday.

The euro was last down 0.41% at $1.1134 after earlier reaching $1.1214, the highest since July 2023. The dollar index rose 0.68% to 100.91. It earlier fell to 100.21, matching a low from Sept. 18, which was the weakest since July 2023. The greenback gained 1.03% to 144.68 Japanese yen and reached 144.75, the highest since Sept. 3.

China's stimulus had earlier contributed to a stronger euro, with its resilience partly driven by a perception that a better outlook for Chinese demand could feed its way back through into Germany and through into Europe, said Jane Foley, senior forex strategist at Rabobank.

Despite weak German economic data and concerns about the French budget, the euro has held up "extremely well" against the dollar this week, she said.

France's budget deficit risks overshooting 6% of economic output this year, the country's new budget minister, Laurent Saint-Martin, told lawmakers in the National Assembly on Wednesday.