* Dollar/yen hits highest level since July 2010
* Euro slips to 3-week low vs dollar after Fed minutes
* Euro/yen poised to close below 200-week moving average
By Lisa Twaronite and Masayuki Kitano
TOKYO/SINGAPORE, Jan 4 The dollar rose to its highest level against the yen in nearly 2 1/2 years on Friday, while the euro also firmed against the yen on expectations that this year will bring more monetary stimulus by the Bank of Japan.
The euro hit a three-week low against the greenback after minutes from the U.S. Federal Reserve's last meeting indicated that while the Fed looks set to continue buying bonds, some policymakers are reticent about further increasing its $2.9 trillion balance sheet.
The dollar added 0.6 percent to 87.80 yen after earlier rising as high as 87.835 yen on trading platform EBS, its highest level against the Japanese currency since July 2010.
Tokyo markets reopened on Friday for the first day of trading after the long Japanese New Year's holiday, with the dollar having gained 12.8 percent against the yen in 2012 in its biggest yearly percentage rise since 2005. Investors are betting that the new government of Prime Minister Shinzo Abe will push to weaken Japan's currency and implement aggressive stimulus, and lean on the Bank of Japan to do the same.
"The yen's negatives are increasingly prominent - economic deterioration, external weakness, geo-political conflict with major trading partners, physical and human capital outflow, and increasing pressure on the BOJ," Steven Englander, head of global G10 currency strategy for Citigroup, said in a research note.
Moreover, he said, the run-up in US equities has pulled the spread between benchmark 10-year U.S. Treasuries and 10-year Japanese government bonds to their widest since early April, which also lends support to the dollar over the yen.
A trader for a Japanese bank in Singapore said the dollar was supported against the yen due to persistent buying interest from non-Japanese players. "People outside Japan are all looking to buy (the dollar) on dips," he said.
U.S. JOBS DATA
The latest Fed minutes revealed that some policymakers believe it will be appropriate to slow or stop asset purchases "well before the end of 2013."
Rob Ryan, strategist for RBS in Singapore, said that the minutes raise the chances that on the back of more good data, a few other Fed policymakers "might shift in that direction and possibly bring QE (quantitative easing) to an end well before people thought was likely."
"If we do get some decent jobs data tonight, then the impact of that jobs data is going to be magnified," Ryan added.
Later on Friday, the U.S. nonfarm payrolls report is expected to show the economy added 150,000 jobs in December, according to a Reuters survey of economists, up from November's 146,000. The U.S. unemployment rate is expected to stay at 7.7 percent.
The euro fell 0.2 percent to $1.3023. Earlier, the euro fell as low as $1.3019, its lowest since Dec. 12.
The euro gained on the yen, rising 0.4 percent to 114.27 yen , but was still far below an 18-month high of 115.995 yen set on trading platform EBS on Wednesday.
Against the yen, the euro is on track to end the week below its 200-week moving average, now near 114.96, which could signal a pullback toward its March 2012 high of 111.43 yen.