* Dollar hovers above 2-½ mth lows vs euro
* Dollar dips vs yen, nears 13-year lows
* Fed's historic rate cut seen keeping dollar pressured
By Masayuki Kitano
TOKYO, Dec 17 (Reuters) - The dollar dipped toward 13-year lows against the yen and hovered above 2-½ month troughs versus the euro on Wednesday after tumbling the previous day, as the Federal Reserve slashed interest rates to as low as zero.
In a historic move, the Fed on Tuesday cut its target for the federal funds rate to a range of zero to 0.25 percent, a record low, from 1.0 percent and said it was willing to keep rates low for an extended period.
The Fed said it would use "all available tools" to support the economy, and added that it was mulling possible purchases of longer-term U.S. Treasury debt and would consider other ways to tap its burgeoning balance sheet to support the economy.
"Dollar selling pressure from the standpoint of interest rates, seems likely to continue," said Masafumi Yamamoto, head of foreign exchange strategy Japan for the Royal Bank of Scotland.
U.S. medium- to long-term bond yields are likely to have more room to fall, Yamamoto said, adding that further declines in yield differentials with comparable Japanese bond yields could drag the dollar lower.
The dollar dipped 0.1 percent against the yen compared to late U.S. trading on Tuesday to 88.84 yen, edging back towards a 13-year low of 88.10 yen hit on trading platform EBS late last week.
The euro stood at $1.4063, having retreated a bit from a 2-½ month high of $1.4150 hit on EBS on Tuesday.
After the Fed's decision, the U.S. benchmark 10-year Treasury yields fell to about 2.26 percent the lowest since 1951, according to Global Financial Data.
A trader for a Japanese foreign exchange broker said the dollar could find some support against the yen, especially if it drops toward its 13-year lows, as market players are mindful of the risk that Japan might conduct yen-selling intervention.
Any falls in the dollar against the yen may also turn out to be limited if higher-yielding currencies rise against the yen as many of them did on Tuesday, the trader said. "What we are seeing is dollar selling rather than yen strength," he said. (Editing by Edwina Gibbs)