NEW YORK, Nov 24 (Reuters) - The U.S. dollar fell and the Treasury yield curve steepened on Tuesday as investors hoped that President-elect Joe Biden's expected nomination of former Federal Reserve Chair Janet Yellen as Treasury Secretary could ease the passage of a potential fiscal stimulus package.

The nomination, confirmed to Reuters by Democratic allies to the Biden campaign on Monday, would put into office a seasoned economist and labor market expert, a safe choice whose experience, market participants believe, should afford her confirmation bipartisan support.

The reports of her expected nomination have driven risk assets higher and demand for safe-havens like the U.S. dollar and longer-dated Treasury debt lower, steepening the yield curve, a bullish signal.

Yellen has called for opening government spending taps to revive an economy racked by the coronavirus pandemic and is expected to urge Congress to pass further fiscal stimulus.

"Yellen I think is viewed as a deficit dove. In times when she has spoken about anything related to fiscal policy in her role as the Fed chair, it was often about how the Treasury needs to do more to cooperate with the Fed and do their part by providing fiscal support," said Tom Simons, money market economist at Jefferies Group.

"Obviously she needs Congress to cooperate there, but she's not going to be a limiting factor."

With Democrats having only a slim possibility of winning a U.S. Senate majority in two Georgia runoffs in January, Yellen faces tough negotiations with Republicans on a coronavirus stimulus package as well as other pieces of Biden's agenda, which includes raising taxes on the wealthy and investing trillions of dollars in infrastructure, education and fighting climate change.

But her chances of being confirmed by a split Congress are seen as high thanks to her experience at the Fed, where in 2015 she engineered the lift-off from zero interest rates in place during the Great Recession, and on the White House Council of Economic Advisors.

That bipartisan support may help her make a case for these spending initiatives.

"There is a little bit of comfort in the notion that she is not dogmatic," said Simons.

"I think the key here is that her performance as Fed chair should make it easier for her to get through the confirmation process."

The dollar has come under pressure in recent months, weighed down by expectations that U.S. rates will remain near historic lows for years to come and as news of various COVID-19 vaccines helped boost investors' appetite for riskier currencies.

The dollar index which measures the greenback's performance against a basket of currencies is down about 4% for the year, on pace for its worst annual performance since 2017. The index was last 0.26% lower.

"The market seems to think that Yellen and Powell equals a dovish delight and spells trouble for the dollar," said Stephen Innes, chief global market strategist at AxiCorp.

"But I think lower for longer is a mantra for all central banks except maybe the (Reserve Bank of New Zealand)."

Given that most market participants were already expecting the Fed to remain accommodative for an extended period of time, the thought of a Yellen-Powell duo was not quite the gut punch for the dollar or short-dated yields.

The benchmark 10-year rate rose on Tuesday, last up 1.6 basis points to 0.875%, steepening the yield curve to the its highest in a week.

(Reporting by Kate Duguid and Saqib Iqbal Ahmed; Editing by Alden Bentley and Andrea Ricci)