* Euro off from seven-month high vs yen
* Germany deputy finance minister sees Greece deal on Monday
* Dollar index not far from three-week trough
* Resumption of U.S. fiscal cliff talks eyed
By Julie Haviv
NEW YORK, Nov 26 The euro fell from a seven-month high versus the yen and held close to a nearly one-month peak against the dollar on Monday as market participants fixated on talks to release new aid to Greece and negotiations in Washington to avoid a U.S. fiscal crisis.
The euro held steady against the greenback after five straight sessions of gains as euro zone finance ministers and the International Monetary Fund began their third attempt in as many weeks to release emergency aid for Greece.
Germany's deputy finance minister said he expected Greece's international creditors to strike a deal later on Monday on unfreezing loans for the heavily indebted country.
Against the dollar, the euro was last flat at $1.2972 , after hitting $1.2991 on Friday, its highest level since late October.
"The euro has shown resilience lately, and after performing strongly last week, we are seeing some consolidation today," said Vassili Serebriakov, forex strategist at BNP Paribas in New York.
"Generally, there is a little more optimism about Greece and lessened concerns about the U.S. fiscal cliff, but there is still an element of caution in the market and we are not at the point of moving into a whole risk-on mode," he said.
Against the yen, the euro was last down 0.4 percent, at 106.38 yen, having hit 107.135 yen on trading platform EBS in Asian trade, the single currency's strongest level since late April.
"The market has been quite long euro/yen so it is quite natural that dollar/yen has had a bit of a pullback where euro/yen has done the same," said Daragh Maher, currency strategist at HSBC. "I don't think there is any conviction in selling the euro as you may have some kind of announcement on Greece, which will probably see a pop higher."
A Greece deal could give the euro a fillip, especially against the struggling yen. The Japanese currency has been under pressure in recent weeks on mounting speculation that a new government after next month's general elections will force the Bank of Japan to ease monetary policy aggressively.
The dollar was weaker against the yen, trading 0.4 percent lower at 82.08 yen, with some investors unwinding long positions that have been built in recent weeks.
Expectations of a deal for Greece overshadowed an election victory for separatists in the Spanish region of Catalonia on Sunday.
HSBC's Maher said Greece was the main concern, and with no sign of a referendum on independence in Spain for the next year at least, the euro was likely to retain its recent gains.
FOCUS ON FISCAL CLIFF
The dollar index, which tracks the greenback against a basket of currencies, was last flat at 80.218, not far from a three-week trough of 80.128 on Friday. Traders said budget talks in the United States would hold sway for the dollar in the near term.
The White House and Congress are set to resume negotiations this week to avoid $600 billion of automatic tax hikes and spending cuts in January known as the fiscal cliff. Analysts fear if budget changes are allowed to kick in, they could tip the world's biggest economy into recession.
Geoffrey Yu, currency strategist at UBS, said he expected a "stop-gap solution" by the end of the year, which would bolster the dollar.
"A resolution clears a major event risk and probably means cuts will not be aggressive either, which would support U.S. yields because of increased confidence in growth," Yu said.
In addition, he said, a swift resolution on the U.S. fiscal cliff could help lift riskier currencies, though it would not be as much of a market-moving event as similar talks last year on the U.S. debt ceiling.
"The euro should end the year at $1.33, but we are still in a back-and-forth market and many factors need to be resolved for that forecast to hold," said BNP Paribas' Serebriakov.
"Some of those factors include Greece receiving more aid, fiscal cliff issues being avoided or postponed and if the Federal Reserve announces plans next month to expand its balance sheet," he said.