FOREX-Dollar gains vs yen but seen on hold as Fed meeting looms
* Dollar/yen up for now, due to Nikkei's gains
* Currencies seen on hold ahead of Fed meeting
* Some expect Bernanke to soothe investors' QE exit worries
* Euro loses steam, Aussie may have found interim base
TOKYO, June 17 (Reuters) - The yen eased on Monday on resilience in Japanese stocks, but stayed near a two-month high against the dollar and euro, as investors looked to when and how the U.S. Federal Reserve will begin scaling down its stimulus.
The focus is on what Chairman Ben Bernanke will say following the U.S. central bank's June 18-19 meeting as expectations that the Fed will start weaning markets off its stimulus have roiled global equities.
The spectre of an end in stimulus has prompted investors and speculators to unwind positions, including heavy selling of the yen spurred by the Bank of Japan's radical easing steps.
"The dollar's up slightly because Japanese shares turned out to be a bit stronger than people had thought. There will be some movements, both up and down, ahead of the Fed's meeting but that's not going to make a trend. You just have to watch the Fed now," said Katsunori Kitakura, associate general manager of market making at Sumitomo Mitsui Trust Bank.
The dollar rose 0.6 percent to 94.70 yen, thanks to gains in the Nikkei share average, though the currency still far from recovering its 3.4 percent fall last week.
Last week, the U.S. currency at one point fell to a two-month low of 93.75 yen, near a vital support around 93.57, a level representing the 38.2 percent retracement of its September-May rally.
Traders said this level also coincides with the 93.45/55 area, which served as a solid support zone in March. A break there will bring into focus 92.57, the April 2 pre-BOJ easing low.
"If Bernanke does not hint at tapering bond buying too aggressively, volatility in financial markets will come down and the dollar/yen will likely rebound," said Minori Uchida, chief FX analyst at the Bank of Tokyo-Mitsubishi UFJ.
Uncertainty about the Fed's next move, disappointment over Japan's latest policy response and worries about a slowdown in Chinese growth have together undermined investors' confidence in risk assets in recent weeks.
That had prompted wild swings in the Nikkei and forced investors to unwind short-yen positions.
In the week ended June 11, currency speculators cut their bets against the yen for a third week, data from the U.S. Commodity Futures Trading Commission showed on Friday.
Still, net yen short positions remained relatively high, at $9.49 billion, suggesting a risk of further short-covering.
"The data suggests that the yen has strengthened even without big short-covering by U.S. speculators. They could unwind their positions, which can trigger more buying in the yen by other players and can lead to an unexpected rally in the yen," said Makoto Noji, senior strategist at SMBC Nikko Securities.
Should the support of 93.57 be broken, the dollar could fall to around 90.43, a 50 percent retracement of the September-May rally, Noji added.
The euro fetched 126.08 yen, up about 0.5 percent on the day but still within sight of a two-month trough of 124.94 plumbed last week.
Against the dollar, the single currency was steady at $1.3333, not far off a 3-1/2-month high of $1.3390 set on Thursday.
The euro has been firm since European Central Bank chief Mario Draghi said earlier this month that a cut in the bank's deposit rate below zero was not on the cards.
But some traders suspect the currency may be starting to lose momentum with some technical indicators, such as the relative strength index, showing signs that it could be considered overbought.
The Aussie rose 0.4 percent to $0.9605. It appeared to have found an interim base since hitting a 33-month low of $0.9325 on June 11. Last week's 0.6 percent gain was its first positive performance after five consecutive weeks of falls.
Against the yen, the Australian dollar rose nearly 1 percent to 90.87 yen, extending its rebound from a 5-1/2-month low of 88.96 set last Thursday.