* More clarity ECB’s Weidmann, Draghi on monetary policy help euro
* ECB Weidmann hinted earlier of negative rates, QE
* Aussie trades near 4-month high versus dollar
By Shinichi Saoshiro
TOKYO, March 26 (Reuters) - The euro steadied in early Asian trade on Wednesday, bouncing off lows after comments from European Central Bank officials helped temper some of their earlier dovish views.
The single currency hit a three-week low on Tuesday after ECB governing council member and Bundesbank chief Jens Weidmann said negative interest rates were an option to temper euro strength and that quantitative easing was not out of the question to combat deflation.
But the euro recovered when Weidmann later said the current euro rate does not call for monetary policy action.
Market watchers said comments by ECB President Mario Draghi that the central bank does not see a key symptom of deflation in consumer spending traits also gave the single currency some relief.
The euro stood little changed at $1.3818, pulling back from the three-week trough of $1.3749 hit on Tuesday.
“The euro moved suddenly and widely after the dovish comments regarding ECB policy, and this likely helped trigger short covering that prompted the bounce off lows,” said Shinichiro Kadota, chief Japan forex strategist at Barclays in Tokyo.
The U.S. dollar index, which measures the dollar against six major currencies, was last up 0.1 percent at 79.979.
The dollar index has found little follow-through momentum from last week when it rose to a three-week high above 80.35 after new Federal Reserve chair Janet Yellen suggested the possibility of raising interest rates early next year.
Similarly, the greenback couldn’t make much headway after data on Tuesday showed U.S. consumer confidence surging to a six-year high in March.
“Monetary policy is becoming the dominant theme in the dollar market. Unless the indicator has direct bearings on monetary policy, like employment or inflation, the market’s sensitivity to such data is becoming lower,” said Kadota at Barclays.
Against the yen, the dollar edged up 0.1 percent to 102.38 , hovering above this month’s low of 101.205 reached when safe haven bids driven by the Ukraine crisis supported the Japanese currency.
The Australian dollar traded at $0.9162, keeping within distance of a four-month high of $0.9178 hit on Tuesday. Speculation that China will unveil stimulus to prop up its slowing economy has helped the Aussie. (Editing by Shri Navaratnam)