FOREX-Dollar dips vs yen, retreats from 2-week high
* Dollar/yen supported by Friday's rise in U.S. yields
* Near-term upside for dollar/yen seen limited
* Euro sags, inches away from Friday's 2-week high
* Profit-taking cited in euro/yen
SINGAPORE, Oct 8 (Reuters) - The dollar eased against the yen on Monday, backing off from a two-week high hit late last week after a surprise drop in the U.S. unemployment rate soothed investor concerns about the U.S. economy's outlook.
The dollar fell 0.1 percent to 78.58 yen, down from Friday's high of 78.88 yen hit on trading platform EBS, the U.S. currency's strongest level since Sept. 19.
The U.S. unemployment rate dropped to 7.8 percent in September, its lowest level since January 2009, the U.S. Labor Department said on Friday.
The data triggered a rise in the 10-year U.S. Treasury yield to its highest level in about two weeks and helped the dollar rise versus the yen on Friday, market players said.
Still, a substantial move higher in U.S. bond yields from here seems unlikely, and any gains in the dollar versus the yen will probably be limited in the near term, said Mitul Kotecha, head of global foreign exchange strategy for Credit Agricole in Hong Kong.
"The impression I get is just above 79 there's a lot of sellers out there. The impression we get is a lot of (Japanese) exporters will be in around that level," he said.
Friday's data was unlikely to be enough to convince market participants that the U.S. jobs market is headed toward a strengthening recovery, Kotecha added.
According to a business sentiment survey published by the Bank of Japan last week, the average dollar/yen exchange rate assumption that major Japanese manufacturers are using in their business plans for the six months to March 2013 is 78.97 yen.
That suggests that Japanese exporters may want to sell the dollar if it rises beyond that threshold, although they are unlikely to be active on Monday, with Japanese markets closed for a public holiday.
The euro fell 0.4 percent to $1.2986, pulling away from Friday's two-week high of $1.3072. Against the yen, the euro slid 0.5 percent to 102.04 yen.
There was some talk that the euro fell due to profit-taking against the yen. Even accounting for Monday's move, the euro is still up around 2.4 percent versus the yen compared to a trough hit in late September.
In addition, a trader for a European Bank in Singapore said the euro was weighed down by comments by German Finance Minister Wolfgang Schaeuble on Sunday that Chancellor Angela Merkel's trip to Greece this week did not mean the debt-stricken country would receive the next tranche of aid from its bailout.
Schaeuble added that Greece must fulfil its obligations for aid to be paid out.
Besides developments in Greece, a focal point for the euro has been when Spain might make a request for external aid. Traders and analysts say the euro could get a boost if Spain makes such a request as that would open the way for the European Central Bank to buy Spanish debt to help bring down Madrid's borrowing costs.
The euro has climbed around 7.8 percent since hitting a two-year low of $1.2042 in late July, bolstered by hopes for ECB action to help quell the region's sovereign debt crisis.