* Dollar at lowest versus euro since Jan. 29
* Investors watch Yellen testimony for tapering clues
* Aussie helped by
By Laurence Fletcher
LONDON, Feb 11 (Reuters) - The dollar fell to its lowest level in almost two weeks on Tuesday ahead of congressional testimony by new U.S. Federal Reserve chief Janet Yellen that could give clues on how quickly the Fed will cut back its stimulus programme.
The Australian dollar rose to its highest point in almost a month, helped by an upbeat business survey and by buying from hedge funds, who have been betting against the Aussie for months but who are now taking profits, said traders.
Volumes were low due to a holiday in Japan and a lack of major economic data, holding most currencies inside recent ranges.
Investors’ focus on Tuesday will be Yellen, who faces her first public test as chair of the world’s most powerful central bank.
She will have to deal with questions from U.S. lawmakers, some hostile to the central bank, who will want to know how committed she is to winding back exceptional stimulus measures.
Her testimony comes at a tricky time given two months of soft employment growth and as a deadline looms on raising the U.S. government borrowing limit before a possible debt default.
Analysts generally assume Yellen will reiterate the Fed will continue tapering its asset buying, as long as the economy improves as expected, while reaffirming a commitment to keeping rates low for a long time to come.
“A lot will hinge on today,” said Simon Smith, FxPro’s head of research.
“She’s known as a dove, but it’s the first time the question (arises) of whether she wants totally to continue this line from her predecessors or shake things up. I don’t think she will (shake things up), but it’s a bit of a risk event for the dollar.”
Analysts at Societe Generale predicted a “steady as she goes” message.
The dollar index fell as low as 80.498, its lowest in almost two weeks, and was last down 0.2 percent at 80.525. The euro rose as high as $1.36835 - also its highest in nearly two weeks - in Asian trading.
However, the dollar was up 0.2 percent against the Canadian dollar - a currency that many hedge funds have been betting against - at C$1.1080.
The Aussie rose 0.8 percent to $0.9016 while the New Zealand dollar gained 0.5 percent at $0.8310.
National Australia Bank’s measure of Australian business conditions on Tuesday rose to its highest in nearly three years in January.
The Aussie has been supported in recent days by comments from the central bank, which last week all but shut the door on further rate cuts, citing improving economic conditions and a pick-up in inflation.
But while hedge funds were buying, there was also nervousness ahead of unemployment data on Thursday, which some fear could be poor. On Monday Toyota said it would stop making cars in Australia, at loss of about 2,500 jobs, by 2017.
There was probably some stop-loss buying at levels above $0.9000 that added to the Aussie dollar’s earlier rise, said Satoshi Okagawa, senior global markets analyst for Sumitomo Mitsui Banking Corporation in Singapore.