* Dollar slips broadly, euro hits 16-mth high
* Fed expected to keep easy money policy unchanged
* Analysts: Fed stance could further punish US currency
(Adds comment, updates throughout; previous TOKYO/SINGAPORE)
By Naomi Tajitsu
LONDON, April 27 (Reuters) - The dollar fell broadly on Wednesday and looked set to remain pressed due to expectations the Federal Reserve will stick with its ultra-loose monetary policy and point to continued low interest rates.
Broad dollar weakness pushed the euro to a 16-month high of $1.4715 while the Swiss franc scaled its strongest on record, and analysts see the possibility for the current dollar-selling momentum to take the euro up towards the $1.50 level.
The yen slipped after S&P downgraded its ratings outlook on Japan's sovereign debt, but overall selling was light as investors are already aware of the economic hardship the country must endure as it recovers from the recent earthquake and tsunami.
The Australian dollar raced to a 29-year high after consumer price data suggested Australian rates will continue to rise, highlighting the policy divergence between central banks which are on a tightening path and those keeping rates low.
Monetary policy was a key focus in the market ahead of a rate announcement by the Fed later in the day, expected to keep rates near zero and signal that it is in no hurry to scale back its massive support for the economy.
Given that central banks in Australia and the euro zone, among others, have started to raise rates, analysts said that the Fed's stance will keep the dollar weak as investors dump the U.S. currency for higher-yielding ones.
"It's clear Fed monetary policy is the reason for dollar weakness. If we don't get any hint that the Fed will normalise, the dollar will continue to stay under selling pressure," said Lutz Karpowitz, currency strategist at Commerzbank in Frankfurt.
In early European trade, the euro traded slightly higher on the day at $1.4662.
Technical analysts say the euro faced immediate resistance around $1.4720, a level the euro hit when it briefly spiked up in late 2008. A sustained break above this level would open the way to the psychologically key $1.50, they say.
The dollar skidded to a three-year low of 73.493 against a currency basket, down close to 10 percent from its peak in January, and many traders expect the index to eventually descend to an all-time low hit in 2008 of 70.698.
It hovered around 0.8750 Swiss franc, having fallen as low as 0.8669 franc in Asian trade, while the Australian dollar shot up as high as $1.0853.
JAPAN WORRIES
The yen was one of the few currencies against which the dollar managed to gain, edging up 0.3 percent on the day to 81.75 yen.
The yen also slipped against the euro and the Australian dollar after Standard and Poor's cut Japan's sovereign rating outlook to negative from stable, warning that the cost to recovery from last month's earthquake will exacerbate already weak public finances.
But the yen is also hovering within reach of a record high around 77 per dollar hit in March, and market participants say its relative resilience to the S&P move suggests the Japanese currency may gain further versus the dollar.
"Today's price action of JPY (after the S&P announcement) already goes to prove that impact on FX should also be limited," JPMorgan analysts said in a note.
"Given the weak USD and relatively better performance of JPY, we continue to expect USD/JPY to break 80 again in the coming weeks." (Additional reporting by Asia Forex Team; Editing by Patrick Graham)