* Japan posts record trade deficit, hits yen
* Unrest in Ukraine likely to limit safe-haven yen's losses
* Status quo favours continued range trading for USD-strategist (Recasts, adds comments, updates prices, changes byline, dateline; previous TOKYO)
By Gertrude Chavez-Dreyfuss
NEW YORK, April 21 The dollar rose to a two-week high against the yen on Monday after Japan posted a record trade deficit in the fiscal year ended in March, though tensions in Ukraine were likely to limit losses on the safe-haven Japanese currency.
The greenback has gained for seven straight sessions versus the yen, with the euro also strengthening to a two-week peak against the Japanese unit in light holiday trading. Many of the European markets are closed due to the Easter Monday holiday.
The yen slid after data showed a much weaker-than-expected rise of 1.8 percent in Japan exports in March from a year earlier, compared with forecasts for a 6.3 percent gain.
The country's trade balance stood at a deficit of 1.446 trillion yen ($14.14 billion) in March, against a shortfall of 1.070 trillion yen expected, after logging a record trade gap of 2.79 trillion yen in January. That marked a record 21-month run of deficits.
"The weak trade figures suggested that sooner or later Tokyo may have to resort to bolder monetary policies to keep the economy on the right track," said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington.
The dollar rose as high as 102.70 yen, its strongest level since April 8. It last stood at 102.60 yen, up 0.2 percent.
Still, losses in the yen could be tempered by fresh tensions in Ukraine. An agreement reached last week to avert wider conflict in Ukraine faltered as the new week began, with pro-Moscow separatist gunmen showing no sign of surrendering government buildings they have seized.
In addition, at least three people were killed in a gunfight early on Sunday near a Ukrainian city controlled by pro-Russian separatists, shaking a fragile international peace accord.
Geopolitical uncertainty tends to support safe-haven currencies such as the yen.
In terms of flows, a trader for a Japanese bank in Singapore said there was talk of dollar-buying against the yen by Japanese banks.
The U.S. unit also edged higher against a basket of major currencies, with the dollar index adding about 0.1 percent to 79.874.
"The greenback's gains are consistent with our caution last week against playing for a breakout as key support for the dollar had been approached," Marc Chandler, global head of currency strategy at Brown Brothers Harriman in New York, said in a note to clients.
"The issue remains the same for the week ahead. Assuming no exogenous shocks, such data or comments that require a significant reassessment of the macro-view, that is to say, the continued status quo favours continued range trading," Chandler added.
The euro rose 0.2 percent against its Japanese counterpart to 141.69 yen, after touching a two-week high of 141.82 earlier on Monday.
Against the greenback, the euro was steady at $1.3815 , though still well shy of a 3-1/2-week peak of $1.3906 marked on April 11.
The euro hit a 2-1/2-year high near $1.40 last month, prompting European Central Bank officials to express their concern that a strengthening currency could damage the euro zone's nascent recovery.
In the week ahead, the dollar could take cues from U.S. housing related-data, as well as a reading on durable goods orders. The durable goods orders report on Thursday is expected to show a 2.0 percent increase in overall orders and a 1.5 percent rise in orders for core capital goods. (Additional reporting by Lisa Twaronite in Tokyo; Editing by Meredith Mazzilli)
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