FOREX-Dollar licks its wounds after painful reversal
* USD consolidating around $1.3090 per euro, 98.90 yen
* Speed of retreat leaves USD bulls chastened for now
* Asia turns cautious ahead of Chinese growth data
SYDNEY, July 12 (Reuters) - The U.S. dollar was quietly nursing its losses on Friday as the smoke cleared after a couple of sessions of wild action that left markets hoping for a bit of calm and consolidation.
The general sentiment was still that the Federal Reserve was likely to start winding back on stimulus before any other major central bank, and so underpin the dollar over the long term.
But after some of the fastest falls seen in years, investors could be more cautious about piling into long positions - making the dollar's uptrend less of a one-way bet.
"It's going to be more of a zig-zag than a straight line," said a dealer at an Australian bank in Sydney. "The fact that Bernanke could sink the dollar with just a few well-chosen words was a warning to bulls not to get too carried away here."
Fed Chairman Ben Bernanke sparked the rout late Wednesday when he emphasised that stimulus was still needed given low inflation and weakness in the labour market, and pledged to push back against any unwarranted tightening in financial markets.
The dollar index, which tracks it against a basket of six currencies, flattened out at 82.755 on Friday, after diving all the way from a three-year high of 84.753 touched on Tuesday.
The euro was camped at $1.3091, having been as high as $1.3201 the previous session. That left its gains since late Wednesday at 2.5 percent, the biggest two-day jump since 2011.
Support was now seen at $1.3005/10, with talk of stop-loss sell orders under there, while resistance lined up at $1.3123.
Analysts at JPMorgan noted the impulsive nature of the dollar's retreat had muddied the technical waters for the currency and increased risk of a deeper pullback.
"As short-term momentum studies have yet to fully unwind the overbought setup for the dollar, additional follow-through seems likely in line with the impulsive reversals," they said in a note to clients.
"Moreover, closes around current levels today should confirm bearish USD weekly reversal patterns for most G10 pairs."
The dollar did find a ledge of support against the yen at 98.90, after falling from 121.21 on Wednesday to as far as 98.27. Support was seen at 98.15 with resistance at 99.51.
While markets hail the U.S. economic recovery, it is Japan that is actually outperforming, with a string of strong numbers recently. The IMF this week revised up its forecast for Japanese growth to 2 percent for this year, even as it again trimmed the global outlook.
These are still very early days in the Bank of Japan's grand experiment in reflation and it remains firmly committed to massive stimulus for many months to come.
Dealers emphasised that the huge trading range on the dollar in recent days had taken out orders and stops on both sides, leaving desks with little in the books for the near term.
Japan was also heading into a holiday weekend and caution was high ahead of a key reading on the Chinese economy due on Monday.
Median forecasts are that growth in gross domestic product (GDP) slowed modestly to 7.5 percent in the second quarter , but many see risks to the downside after a run of soft numbers.
Apprehension of a nasty surprise was one reason the Australian dollar ran into selling in New York on Thursday which saw it recoil to $0.9168, from a $0.9306 peak.
China is Australia's single biggest export market and the Aussie is often sold as a liquid proxy when investors want to hedge against weakness there.