FOREX-Dollar still sluggish against yen, though aided by exporters
* Dollar index steady after plumbing 4-month low
* Exporters now eager to maintain dollar at 95 yen - trader
* Aussie dollar falls after bouncing off multi-year lows
TOKYO, June 14 (Reuters) - The dollar remained sluggish against the yen on Friday, but gained a foothold above 95 after plunging to a two-month trough in the previous session, thanks to a bounce in Japanese stocks and bids by exporters.
The greenback last bought 95.28 yen, a whisker below late U.S. levels but comfortably above a nadir of 93.75 the yen grazed on Thursday after a 6.4 percent rout in the Nikkei.
On Friday, the Nikkei rose 1.9 percent.
The dollar-yen has been locked in step with the Japanese benchmark in recent weeks as investors unravel the sell-yen, buy-stocks trade that dominated the market between November and May. A fall in equities also forces investors to pare the dollar hedges initially put in place to protect them from a weakening yen.
Traders said that exporters who missed the boat to buy yen when the dollar reached 100, hoping for it to get to the 105 level, had now set 95 yen as a critical target.
"When it broke the 95 level yesterday, exporters got a bit nervous, so as soon as it recovered above that level they started to come out of the woodwork today," said a senior trader at a major Japanese bank.
"If speculators had dollar shorts on yesterday it looks like they're unwinding them today, and perhaps a few are starting to build up longs again," he added.
The dollar index was steady after slumping to a fresh four-month low of 80.500 on Thursday as upbeat U.S. data lifted global equities, prompting investors to favour the euro and commodity currencies.
Against a basket of currencies, the greenback was on track for a loss of around 3 percent over the past two weeks, its biggest decline for such a period in more than a year.
"A stress buildup is becoming increasingly apparent in FX markets... the US Dollar Index's recent drop below the 200-day average argues for further profit taking," wrote Barclays analysts in a note, referring to a level breached on Wednesday.
The current bout of market turbulence started when investors began worrying that the Federal Reserve will start scaling back its stimulus programme this year.
Winding the programme down early should be a boon for the dollar, as the Fed's bond-buying is tantamount to printing money. But some investors are concerned that risk appetites will shrivel if the flow of easy money is reduced - a worry that has seen emerging currencies such as the Indian rupee and South African rand battered in recent weeks.
"One way to view the markets since May is that participants have started to 'grieve' the loss of extreme Fed policy accommodation," said Alan Ruskin, strategist at Deutsche Bank.
"For the coming week, markets should position for Bernanke trying to assuage market fears."
Ruskin said Bernanke has a strong interest in making it clear that the timing of any withdrawal is data dependent and that the Fed chief needs to clarify some parameters behind a 'tapering' decision.
Markets are now waiting to see if Fed Chairman Ben Bernanke will try and soothe markets after its June 18-19 policy meeting.
EURO GRINDS HIGHER
The euro held near late U.S. levels at $1.3352, after a slow-grinding rally beginning on May 17 took it to a four-month high of $1.3390 on Thursday.
The common currency's next block of resistance is eyed at $1.346, but analysts say the ongoing rotation out of emerging currencies back could allow it to reach above $1.37 in coming weeks.
Some of the increased interest in the euro has come as investors turn bearish on the Australian dollar, which has shed 7.5 percent since the beginning of May, sinking to a 33-month low of $0.8325 on Tuesday.
On Friday, the Aussie pulled back 0.6 percent to $0.9587 after jumping nearly 2 percent to $0.9665 on Thursday.
The New Zealand dollar slipped 0.5 percent to $0.8053 after gaining 1.9 percent on Thursday to move away from a one-year low of $0.7761 struck on Tuesday.