March 6 (Reuters) -U.S. cotton futures rose nearly 2% on Wednesday and was set to snap a four-session losing streak as the dollar weakened, while investors buckled in for a federal monthly supply and demand report due later this week.

* Cotton contract for May CTc2 rose 1.5% to 95.69 cents per lb by 11:04 a.m. ET (1604 GMT).

* The dollar index .DXY fell 0.3%. A weaker dollar makes natural fiber less expensive for buyers holding other currencies. USD/

* "I think cotton will continue to bounce like this, it's going to be very choppy," said Jon Marcus, president of Lakefront Futures and Options brokerage, in Chicago.

* "Prices will likely trade between 85 and 90 cents, I don't think a rally above that will sustain."

* Market focus has now shifted to the U.S. Department of Agriculture's monthly World Supply and Demand Estimates (WASDE) report due on Friday.

* Last month's WASDE report showed lower ending stocks relative to those in January, with higher exports and lower mill use, while production remained unchanged.

* Further providing support, oil prices rose on supply tightness. Higher oil prices make polyester, a cotton substitute, more expensive. O/R

Reporting by Anushree Mukherjee in Bengaluru; Editing by Shilpi Majumdar