* Eurogroup's Juncker says euro is 'dangerously high'
* Euro pulls back from 11-mth high vs dollar, falls vs yen
* Dollar/yen falls 1 percent to 87.79 yen
By Anirban Nag
LONDON, Jan 16 The yen rose for a second day on Wednesday as investors pared large bets against it, with gains more pronounced against the euro as the single currency was hit by comments from a senior euro zone official.
The euro fell 1.3 percent to 116.47 yen, as the single currency lost momentum after Jean-Claude Juncker, the chairman of the euro zone finance ministers said, the euro was "dangerously high".
The euro lost 0.3 percent against the dollar, trading at $1.3270 and pulling further away from an 11-month high of $1.3404 set on Monday. Traders cited stop loss sell orders below 1.3250 and said the euro could fall below that level, before fresh buying from sovereign buyers emerge.
"Those comments from Juncker suggests that euro zone politicians are gearing up for some rearguard action and responding to the rhetoric we have had from Japan," said Neil Mellor, currency strategist, at Bank of New York Mellon.
"Of course, the euro has momentum, but there are risks of slippage in the euro zone given the outlook for growth is weak and there is always a chance Italy and Spain can miss their deficit targets."
The euro had risen to its highest in 20 months against the yen this week, 120.13 yen, after the European Central Bank last week dashed expectations of a near-term rate cut and as Japanese officials ramped up pressure on the Bank of Japan to ease monetary policy aggressively and weaken the yen.
A rising currency hurts exports and major central banks, including the Federal Reserve, the Bank of England and the Bank of Japan, have been printing money in an attempt to keep the value of their currencies lower by increasing supply.
Juncker's comments contrasted with remarks last week from ECB chief Mario Draghi, who said the euro's real and effective exchange rates were close to long-term averages, showing little desire to drive the currency lower to boost euro zone exports.
"The past few weeks have re-exposed a couple of issues with the common currency," Citi's Greg Anderson said in a note. "First, there is no clear spokesman tasked with 'talking the currency down' as Japan's new administration has done so effectively over the past six weeks."
He added that since Juncker will be stepping down as leader of the euro zone finance minister's group soon, the currency bloc would need a spokesperson to avoid "brutal" euro moves.
The latest rebound in the yen came after Japan's Economics Minister Akira Amari cautioned on Tuesday that excessive yen weakness could boost import prices, hurting people's livelihood.
Many traders called it a healthy correction, given the yen has lost substantial ground since October.
Investors have put on big bets against the currency with the new government in Tokyo very vocal about pressing the BOJ to tackle deflation, calling for a 2 percent inflation target.
The BOJ is widely expected to agree such a target at its policy meeting on Jan 21-22.
"The yen's fall has been quite fast so far. If its fall is too fast, its reversal could be fast as well. It seems to me that Amari's comments were intentional efforts to curb overheating in the market," said Kimihiko Tomita, head of forex at State Street in Tokyo.
The dollar fell 1 percent to 87.79 yen, below support at 88.25, the 50 percent retracement of its Jan. 9-14 rally from 86.825 to a 2-1/2-year high of 89.67. Traders cited bids at 87.70/80 yen.
Some traders say there could be buy-on-rumour-sell-on-fact selling in dollar/yen after the BOJ meeting.
"I haven't come across anyone who seriously thinks that the BOJ can boost inflation to 2 percent," said Takako Masai, head of forex at Shinsei Bank, adding that the BOJ meeting could offer a good chance to exit bearish bets on the yen.