* Dollar at 4-month lows in illiquid trade * Yen strength extends; Aussie dollar surges against greenback * Euro makes modest advance versus U.S. dollar By Daniel Bases NEW YORK, June 12 The U.S. dollar fell broadly on Wednesday, as investors reevaluated recent expectations that the U.S. Federal Reserve might begin pulling back its stimulus measures sometime this summer. The uncertainty over when the Fed will start to limit its monthly purchases of bonds in order to boost the economy has roiled global markets, increased the volatility in currency prices and pushed the U.S. dollar index to a four-month low. The Fed's next policy meeting will be held next week, on June 18-19. The dollar index, which tracks the greenback against a basket of six other major currencies, broke through its 200-day moving average and last traded down 0.25 percent at 80.92 . "There is a lot of consolidation going on headed into next week's Fed meeting,' said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington, D.C. "There is broad volatility and people are afraid the Fed will push off its bond-buying tapering until later in the year." In addition, the Bank of Japan's decision on Tuesday to provide no further monetary easing steps spurred an unwinding on short yen positions, which drove down the greenback and the euro against the Japanese currency. Overall, the dollar is at a 2-1/2-month nadir against the yen and at roughly four-month lows against the euro, the Swiss franc, and the British pound. Deleveraging, monetary policy and positioning have been driving markets and "today, markets are retracing some of the losses suffered in the last few sessions," said Camilla Sutton, chief currency strategist at Scotiabank in Toronto. "Increasingly, monetary policy appears to have reached its limit in terms of stimulus," she said, noting that the Fed appears to be moving toward stepping out of quantitative easing while the Bank of Japan has an aggressive policy in place, but is not eager to add to it. Emerging markets have been among the main victims of the deleveraging from the easy money policies, with their currencies under heavy selling pressure. "There's more discussion over the Fed and when it might reduce the pace of stimulus. ... The Fed is probably not going to announce anything for a few months," said Eric Viloria, currency strategist at Forex.com in Bedminster, New Jersey. The dollar traded at 95.81 yen, down 0.22 percent on the day, having fallen to 95.13, its lowest level since April 4. On Tuesday it closed below its 100-day moving average for the first time since October. The euro traded at $1.3331, up 0.13 percent on the day, according to Reuters data. Against the yen, the euro was unchanged on the day at 127.84 , clawing back some lost ground. The biggest gains against the greenback on Wednesday were made by the Australian and New Zealand dollars, fueled in part by a bounce higher in June consumer confidence for Australia. "Definitely some profit taking there with the Aussie consumer confidence data giving the reason to cash in on recent U.S. dollar strength. The kiwi has a strong correlation and is getting pulled (higher) as well," said John Doyle, director of markets at Tempus Inc, a Washington, D.C.-based corporate foreign exchange trading house. The Aussie dollar rose as high as $0.9564 against the U.S. currency before settling back to $0.9468, a gain of 0.47 percent on the day. The kiwi traded up more than 1 percent at $0.7956. Buying of the dollar against the yen was brief following a drop in Japan's April core machinery orders, suggesting companies remain hesitant to increase capital spending despite government stimulus policies. "Overnight there was a blip up for the U.S. dollar on the back of the machinery orders, but it was not a big enough print to weaken the yen. This may have slowed the train of yen buying a bit, but not enough to stop it," said Doyle. The yen slid 20 percent against the greenback between mid-November and May, underpinned by Japanese Prime Minister Shinzo Abe's sweeping policies to stimulate the economy and spurred on by the BOJ's audacious easing program launched in April under new governor Haruhiko Kuroda. Sterling briefly traded at $1.5699 against, its best level since early February. It faces big resistance to break higher at the $1.57 level, traders said.