* BOJ keeps policy unchanged, sounds upbeat on economy
* BOJ Governor Kuroda sees no immediate need to ease policy
* Euro supported by wait-and-watch stance by ECB policymakers (Updates market action, adds quote, changes byline, dateline, previous LONDON)
By Richard Leong
NEW YORK, April 8 (Reuters) - The yen strengthened on Tuesday as traders dialed back bets against it after the Bank of Japan held off on additional easing and Governor Haruhiko Kuroda offered little indication more stimulus was likely in the short term.
Many investors have been selling the yen in anticipation a sales tax hike that took effect in Japan at the start of April will hurt consumption and the BoJ may have to ease policy in coming months to soften the blow.
The BOJ decision to refrain from further monetary stimulus was seen supportive for the yen.
“You had a lot of players who were short they yen and Kuroda dashed the hopes of stimulus,” said Richard Scalone, co-head of foreign exchange at TJM Brokerage in Chicago.
The dollar fell 0.8 percent to a 10-day low of 102.23 yen while the euro shed 0.5 percent to 141.01 yen, the lowest in more than a week.
Also helped by subdued stock markets, with which it has an inverse correlation, the yen had been inching up before the BOJ policy decision.
It extended those gains after the BOJ kept policy unchanged, and strengthened further after Kuroda sounded upbeat about the economy and said both inflation and growth would pick up in coming months despite the sales tax hike.
“Kuroda is signalling a ‘steady-as-she-goes’ hand as regards to monetary policy which will disappoint some yen bears,” said Peter Kinsella, currency strategist at Commerzbank. “Unless inflation falls sharply it doesn’t look that they will ease.”
The greenback has struggled against the yen in recent sessions after Friday’s March U.S. jobs data disappointed some investors who have been betting on a faster recovery in the world’s largest economy. It has pulled back from a 10-week high of 104.13 yen set on Friday.
The below-forecast 192,000 U.S. job gain last month stoked buying of U.S. government debt, sending yields to one-week lows. The 10-year Treasuries yield was last 2.706 percent, flat on the day.
“The latter part of the dollar’s weakness is because of lower U.S. yields,” TJM’s Scalone said.
The dollar’s recent drop offered opportunity for investors to initiate fresh bets in favor of the greenback and against the yen, analysts said.
That is based on the view that monetary policy between the Federal Reserve and the BoJ is increasingly diverging. The Fed is tapering its bond-buying program and many are also looking for it to hike rates sometime in the middle of 2015.
“At 102.50 yen, dollar/yen looks attractive to go long,” said Yujiro Gato, analyst at Nomura in London. “The downside for dollar/yen is limited and at the end of the second quarter, we could see it rise to 105 yen.”
The euro rose 0.4 percent against the dollar at $1.3799 , staying above a one-month low of $1.3672 set on Friday. It gained after European Central Bank policymakers continued to hold down expectations on measures to avert deflation in the euro zone.
Many, though, were wary of pushing the single currency much higher as further strength might lead the ECB to take action.
“For the ECB, further appreciation of the euro is not acceptable. Any move towards $1.40 will see a response,” said Bill O‘Neill, head of the UK investment office at UBS Wealth Management in London.
“Negative deposit rates will clearly have an impact on weakening the euro. The Fed won’t be enough to push the euro/dollar decisively lower, you need some form of accommodation from the ECB,” he said. (Additional reporting by Anirban Nag in London; Masayuki Kitano and Natsuko Waki in Tokyo; Editing by Catherine Evans and Meredith Mazzilli)