FOREX-Dollar slips on profit-taking, ECB, BoE awaited

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* Dollar slips on profit-taking, oil holds above 3-month low

* ECB and BoE both seen keeping rates on hold

* ECB's Trichet awaited for clues on policy

By Naomi Tajitsu

LONDON, Aug 7 (Reuters) - The dollar weakened broadly on Thursday as dealers took profits from its recent gains ahead of two major interest rate decisions in Europe, and as selling in oil paused after prices hit three-month lows the previous day.

The European Central Bank is widely expected to keep rates on hold at 4.25 percent, leaving the market's focus on ECB President Jean-Claude Trichet's news conference for clues on what policy over the coming months might be.

The Bank of England is thought to be set to keep its rate at 5 percent.

"There's a little bit of adjustment coming off the back of some pretty strong dollar gains," said Tom Levinson, FX strategist at ING, adding that the moves were limited as traders braced for the ECB's decision at 1145 GMT then Trichet's words to journalists at 1230 GMT.

The BoE will announce its rate decision at 1100 GMT.

Rebounding global stocks, a near-$30 fall in oil prices from a record high, cautious optimism surrounding the outlook for the U.S. financial sector and a broadly growth-supportive tone from the Federal Reserve this week have boosted the dollar recently.

The rally culminated in the dollar's climb to a seven-month peak against the yen and a near two-month high against a basket of major currencies on Wednesday.

At 1011 GMT the euro was up a third of a percent at $1.5465 EUR=, not far from a session high of $1.5487.

The single currency's to figures showing smaller-than-expected rises in Italian and German output was limited , and it recovered from a dip below $1.54 earlier in the day to match a near two-month low according to Reuters data.

The dollar slipped around a quarter percent against the yen to 109.45 yen JPY=, off a seven-month high of 109.89 yen on trading platform EBS the previous day.

But the yen's gains were limited after Japan's government said the economy was weakening and may have entered a recession [nT277427].

The dollar index, a measure of the greenback's value against a basket of six currencies, was down a third of a percent at 74.056 .DXY. The index closed above the 200-day moving average on Wednesday for the first time since April 2006 but is just below it now.

Traders took profits and trimmed positions before the ECB and BoE decisions, while pondering whether the dollar's rally was possibly overdone.

"The dollar move is possibly becoming a bit excessive relative to the optimism in the market to what we think is the reality," said Derek Halpenny, head of global currency strategy at BTM-UFJ in London.

"An imminent downturn in the (U.S.) economy is coming again."

SPOTLIGHT ON TRICHET

Financial markets are betting the ECB will hold rates on Thursday and that they will remain steady for the rest of the year, although they're still reflecting a 40 percent chance of a hike in the coming months.

Given this possibility, currency traders will scrutinise Trichet's press conference for any hints to the outlook for monetary policy, after it raised rates to 4.25 percent in July.

Levinson at ING said that Trichet had little choice but to say the central bank remains vigilant about inflation.

"So soon after a rate hike last month, he's got to stay hawkish, so he'll probably play down recent economic activity data, which has been weak, and talk up the fact that inflation remains at a record high," he said.

Like many central banks, the ECB is caught between slowing growth and sticky inflation, even though oil fell as low as $117.11 a barrel on Wednesday, around $30 off its July peak.

BTM-UFJ's Halpenny also expects Trichet to keep up his anti-inflation rhetoric, but reckons the ECB has no choice but to acknowledge the "clear deterioration" in economic data since July's rate hike, even if it wishes to avoid suggesting that a cut could follow just a month after tightening.

(Additional reporting by Jamie McGeever; editing by Gerrard Raven)