* AUD, NZD dlrs fall about 1 pct as dollar up broadly
* NZD falls after unexpected drop in retail sales
* Yen holds firm near 7-mth high vs USD with cross yen fall
By Satomi Noguchi
TOKYO, Sept 14 (Reuters) - The dollar rose broadly on Monday with the Australian and New Zealand dollars down sharply as speculators covered short positions that had pushed the greenback to one-year lows.
The higher-yielding Australian dollar, one of the drivers of the market recently as the U.S. dollar fell, lost about 1 percent in tandem with oil prices dropping, denting commodities-linked currencies like the Aussie, traders said.
The dollar's rebound had started with the New Zealand dollar's fall in early trade after soft data showing the country's retail sales dipped unexpectedly in July, traders said.
The yen held near a seven-month high against the dollar struck earlier with slides in other major currencies versus the dollar also giving a broad boost to the yen.
"Given the the Aussie and oil falling -- a slide in those assets that had driven the recent dollar selling market -- it may be a sign that the market is entering a corrective phase, though we don't know if this will become a big wave until foreign players join the market later in the day," said a senior trader for a Japanese brokerage firm.
The Australian dollar fell 0.7 percent to $0.8579, retreating from Friday's high of $0.8677 hit on trading platform EBS -- also its more than one-year high.
The New Zealand dollar slid 1.3 percent to $0.6985, off its over one-year peak of $0.7089 also struck on Friday.
The kiwi slipped after retail sales fell unexpectedly for the second month in a row in July, backing the central bank's view that recovery from recession was patchy.
The dollar index, a gauge for the greenback's performance against six major currencies, rose 0.3 percent to 76.873, rebounding from its one-year low of 76.457 hit late last week.
The dollar was seen ready for a broad rebound on short-covering after currency speculators raised their bets against the greenback to the most since at least mid-July 2008 -- which coincides with the timing when the euro hit its record high against the U.S. currency.
The euro slipped 0.3 percent to $1.4539 and fell 0.6 percent to 131.37 yen.
The dollar was down 0.4 percent at 90.33 yen, having fallen earlier to as low as 90.18 yen on EBS.
The yen held strong versus the dollar after some traders saw falling U.S. Treasury yields undermining the greenback's yield appeal.
Dealers say there are large option barriers at around 90 yen and gains could be capped around that level.
The 90 yen level is also considered to be psychologically important and a break below that level could pose a headache for Japanese authorities who have usually frowned on a sharply higher currency in the past. (Additional reporting by Anirban Nag; Editing by Michael Watson)