FOREX-US dollar slips on rate view after Bernanke speaks

                                
  
                                
 * Bernanke offers no hint about monetary policy outlook
                                
 * Euro targets 2011 high of $1.3862 and then $1.3950
                                
 * Sterling hits 13-month high vs dollar on rate view
 (Updates prices, adds details)
                                
 NEW YORK, March 1 (Reuters) - The U.S. dollar fell to a
3-1/2-month low against a basket of other major currencies on
Tuesday and could fall further after Federal Reserve chief Ben
Bernanke offered no hint that the U.S. central bank was
considering tightening its loose monetary policy.
                                
 After briefly dipping below $1.38, the euro rebounded and
remained on track to test key resistance around $1.3862, the
2011 peak. Analysts expect the euro to stay supported ahead of
Thursday's European Central Bank policy meeting, at which the
ECB may signal a willingness to hike rates.
                                
 In testimony before Congress, Bernanke said downside risks
to growth had diminished and said for the first time that the
risk of deflation was now "negligible." But he said job growth
remains far too anemic and provided no clue whether the Fed was
considering cutting short its $600 billion bond-buying program
designed to stimulate the economy. For more see
[ID:nLDE72024L].
                                
 "There is nothing that Bernanke has said that is going to
change the market's view that the Fed is going to be a laggard
in the tightening cycle relative to most G10 central banks,"
said Alan Ruskin, global head of Group of 10 foreign exchange
strategy at Deutsche Bank in New York.
                                
 The dollar index <.DXY>, which tracks the greenback's
performance against a basket of major currencies, fell to
76.735, its weakest level since early November.
                                
 The euro last traded little changed at $1.3806 <EUR=EBS>,
still near a one-month high of $1.3857 hit on trading platform
EBS on Monday. The euro fell as low as $1.3795 after Bernanke's
comments before recovering. The global session low posted at
$1.3786 in Asian trading.
                                
 "Overall, (Bernanke's) tone is somewhat balanced but it's
encouraging to see that the risk of deflation is moderating
according to the Fed," said Omer Esiner, chief market analyst
at Commonwealth Foreign Exchange in Washington. "That's one of
the keys that'll be necessary for the Fed to wind down its
quantitative easing."
                                
 Traders reported stop losses above $1.3860, which is around
euro/dollar's 2011 high set on Feb. 2 and a break above which
would mark the highest since early November. Further upside
targets include $1.3948, around the 76.4 percent retracement of
the euro's fall from November to January, and $1.3957, the
200-week moving average.
                                
 On the downside, support lies around $1.3775, the 23.6
percent retracement of the euro's rise from the Feb. 22 low to
the Feb. 28 high.
                                
 "The hurdle from here is whether or not ECB President
Trichet will deliver a more hawkish tone," said Camilla Sutton,
senior currency strategist at Scotia Capital in Toronto,
referring to expected remarks by ECB chief Jean-Claude Trichet
after the policy meeting on Thursday.
                                
 "The risk is that the ECB fails to deliver and the euro
weakens. However, we expect that the fundamentals have shifted
enough that President Trichet will not disappoint."
                                
 The dollar rose 0.1 percent to 81.86 yen <JPY=EBS>, with
traders citing earlier heavy buying of dollar/yen by Japanese
exporters. The euro rose 0.1 percent to 113.04 yen
<EURJPY=EBS>.
                                
 Against the Swiss franc, the dollar was flat at 0.9287
<CHF=EBS> and the euro fell 0.1 percent to 1.2817
<EURCHF=EBS>.
                                
 Traders said uncertainties in the Middle East and North
Africa remained high, and if tensions escalate investors could
again buy the Swiss franc and yen, the two currencies that have
tended to benefit the most when risk aversion rises.
                                
 Sterling <GBP=D4> rallied to a 13-month high against the
dollar of $1.6330, after stronger-than-expected UK housing data
stoked expectations the Bank of England will raise interest
rates before the Fed.
                                
 The Canadian dollar fell against the U.S. currency after
the Bank of Canada kept its main interest rate at 1 percent and
gave no signal it plans to push the rate up soon. The greenback
last traded up 0.3 percent against the loonie at C$0.9748,
after falling to a three-year low of C$0.9684 <CAD=D4>.
[ID:nLDE7201U4]
 (Reporting by Nick Olivari and Wanfeng Zhou; Editing by James
Dalgleish)