FOREX-Euro slips on weak euro zone data, ECB comments
* German Ifo falls short of forecast
* Draghi LTRO comments still weigh on euro
* Dudley says Fed expects slower U.S. growth now
* Dudley says will not rule out Fed trimming stimulus this year
NEW YORK, Sept 24 (Reuters) - The euro fell for a third straight day against the dollar and yen on Tuesday after German sentiment data came in slightly below expectations and comments from European Central Bank officials saying they were prepared to do more to keep interest rates low.
German business morale improved slightly in September to touch a 17-month high, data from the Ifo think tank showed, but it was short of consensus forecast, pressuring the euro. Investors were quite sensitive to euro zone economic data in the wake of remarks from ECB President Mario Draghi on Monday saying the bank was ready to provide more cheap long-term loans to keep money market rates from rising.
"Draghi is using the LTRO (long-term refinancing operation)carrot having been beaten to it by the Fed," said Sebastien Galy, currency strategist, at Societe Generale in New York.
"The outcome is to see euro/dollar fade very gently...The potential though is for more downside."
His message was reinforced by ECB Governing Council member Ewald Nowotny, who said on Tuesday it was too soon for the bank to go into exit mode from its crisis measures
In early New York trading, the euro was down 0.2 percent at $1.3470. Support was cited at the August high of $1.3453. Large options expiries were reported at $1.3500 and $1.3200.
Against the yen, the euro was down 0.2 percent at 133.09 .
The dollar was weighed down by comments from Federal Reserve officials suggesting the central bank was wary of threatening a still fragile U.S. recovery.
New York Fed President William Dudley, a well known dove and close ally of Fed Chairman Ben Bernanke, defended the central bank's shock decision last week to keep its stimulus in place.
The economy was weaker than the Fed thought in June, he said in an interview on CNBC, but "wouldn't rule out" a cut in the central bank's stimulus this year.
Bob Lynch, head of G10 FX strategy for the Americas, at HSBC in New York, thinks the impact of the delay in the Fed's tapering has been diminishing and part of this could be attributed to comments from some Fed officials including Dallas Fed President Richard Fisher.
Fisher late on Monday said the decision not to taper the Fed's bond buying was a close one. HSBC's Lynch said Fisher's comment suggests that tapering could happen at the next meeting.
Markets are also concerned that a political showdown in Washington could see the government shut down, or at the very extreme, default on its debt.
The dollar was up 0.1 percent at 80.533 against a basket of currencies, having hit a seven-month trough of 80.06 last week.
Analysts said the dollar was weighed down by slipping U.S. Treasury yields. Benchmark 10-year U.S. Treasury yields were last at around 2.69 percent, having fallen from the near two year high of 3.007 percent hit on Sept. 5.
Citi technical strategists cited interim support at 2.40 percent, a break of which could see yields fall to 2.17 percent.
"It is hard to see the curve steepening dramatically in the U.S. without some signs of cyclical outperformance in the economy or a change in sentiment about the Fed," said Paul Robson, currency strategist at RBS.
Against the yen, the dollar was flat at 98.74 yen.