FOREX-Dollar hits 4-month low vs yen, remains on defensive

* Dollar/yen touches lowest level since mid-September

* Speculation of eventual BOJ stimulus exit supports yen

* Recent broad-based dollar weakness also dents dollar/yen

SINGAPORE, Jan 24 (Reuters) - The dollar touched a four-month low against the yen on Wednesday, pressured by simmering concerns that the U.S. currency’s yield advantage will start to erode as major central banks head toward unwinding their massive stimulus.

The yen has gained a lift in recent weeks, after the Bank of Japan trimmed its buying of long-dated government bonds in market operations earlier this month, sparking speculation of an eventual exit from its large stimulus.

Analysts said such speculation continued to support the yen, even after BOJ Governor Haruhiko Kuroda on Tuesday stressed the importance of patiently continuing with powerful monetary easing.

“The dilemma here for the Bank of Japan is how do they temper investor expectations?” said Stephen Innes, head of trading in Asia-Pacific for Oanda in Singapore.

“This is the issue that’s on the table right now beyond the broader negative downtrend in the dollar,” Innes said.

The dollar slipped to as low as 110.06 yen at one point, its lowest level since Sept. 15. It later pared some losses and was last down 0.1 percent at 110.16 yen.

The greenback has shed nearly 2.3 percent against the yen so far this month, putting it on track for its biggest monthly drop since January last year.

“On the BOJ, they have just reaffirmed pretty much what we already know and what the market already knows, that they’ll continue to maintain an aggressive, powerful easing stance,” said Peter Dragicevich, G10 FX strategist for Nomura in Singapore.

That stance, however, has been factored in and market players are looking ahead to what the BOJ might do next, Dragicevich said.

“They are looking at the next potential, kind of incremental steps, whenever they may come,” he added.

Analysts said the euro’s firm tone also helped weigh on the dollar.

The euro last changed hands at $1.2306, up 0.1 percent on the day and near a three-year high of $1.2323 set last week.

Euro zone consumer confidence jumped much more than expected in January, data from the European Commission showed on Tuesday, helping to support the common currency.

Investors are also focusing on the European Central Bank’s meeting on Thursday for clues on the outlook for monetary policy.

The euro has rallied this year, boosted by growing optimism that a strengthening economy would prompt the ECB to signal a quicker end to years of efforts to stimulate the economy than previously forecast. (Reporting by Masayuki Kitano; Editing by Sam Holmes)