* Dlr down slightly on speculation Fed may suggest more QE
* Aussie rallies after hawkish comments from RBA's Stevens
* Dlr/yen little changed, investors wary of intervention
(Adds comments, details. Updates prices)
By Vivianne Rodrigues
NEW YORK, Sept 20 (Reuters) - The dollar slipped broadly on Monday on speculation the Federal Reserve may suggest the need to inject more stimulus into the struggling U.S. economy when it announces its latest policy decision on Tuesday.
The possibility of more Fed quantitative easing -- which may push benchmark yields lower, hurting the return of U.S. dollar-assets -- highlighted differences in policy among major central banks, as the Australian dollar hit a two-year high on hawkish Reserve Bank of Australia comments.
The greenback traded in a thin range against the yen because of a market holiday in Japan and as investors were cautious of taking big yen positions after Japan's intervention last week to curb the strength of its currency.
The Fed is expected to refrain from implementing new steps to ease monetary policy on Tuesday, while renewing its promise to keep its portfolio of assets from shrinking. For a Fed preview, see
"Trading may remain range-bound ahead of tomorrow's FOMC meeting," said Boris Schlossberg, a director of currency research at GFT Forex in New York.
"Markets are wary of both the sovereign debt risk in Europe and the QE risk from the Fed," he added. "However, if the Fed does not alter its language from last month's statement, thus implicitly signaling that QE will not be an option in the near term, the greenback may strengthen as the week progresses especially if risk aversion flows return."
In late morning trading in New York, the U.S. currency was 0.2 percent lower against a currency basket, after falling earlier to 81.046, near a five-week low of 80.865 hit last week.
The Australian dollar rose more than 1 percent and touched as high as $0.9469, its strongest since mid-2008, after Reserve Bank of Australia Governor Glenn Stevens suggested Australian interest rates would rise further.
Gains were capped, however, with traders citing talk of a large option being defended at $0.9475 with expiry at the end of the month. A break above there, however, would prompt traders to target the psychological $0.95 level.
Data showing a U.S. home-builder index unexpectedly held steady in September had a limited impact on the dollar.
Analysts said the index still points to a weak housing market, which in turn contributes to the Fed's consideration of further stimulus through quantitative easing.
FED AHEAD
A sluggish U.S. recovery has stung the dollar in recent months as it has raised the possibility of more quantitative easing, although recent U.S. data -- while still weak -- has shown a slight improvement.
"The consensus is that the Fed won't do anything tomorrow, but if they indicate that more QE may be on the way, it would send a strong signal to sell the dollar during the week," said Kasper Kirkegaard, currency strategist at Danske in Copenhagen.
The euro was little changed after climbing to as high as $1.3120, helped by a rise in European shares, though sentiment toward the single currency was still dented by concerns about Ireland's finances.
Ireland's central bank said the country would need to rethink plans to cut a bloated budget deficit.
Against the yen, the dollar was 0.1 percent lower at 85.72 yen, keeping in a tight range after Japan intervened last week, pulling the U.S. currency up from a 15-year low.
Further dollar gains were capped by its 55-day moving average, which came in at 85.88 yen on Monday, and investors were focused on whether the dollar would break above 86.00 yen.
"Asian markets were quiet overnight with the dollar/yen staying in a relatively quiet range as Japan was on holiday," said Brad Bechtel at Faros Trading LLC, in Connecticut. Bechtel said dollar/yen traded in a 85.60-70 range with a brief dip to 85.50 as London walked in but that was "momentary."
In addition to the prospect of more intervention, strength in the Japanese currency may subside as speculators have slightly cut long yen positions -- bets that it will appreciate.
The latest Commodity Futures Trading Commission data shows net long yen positions fell to 47,642 as of last Tuesday, the day before Japan entered the market, from 52,183 the previous week.
(Additional reporting by Nick Olivari in New York and Naomi Tajitsu in London; Editing by Andrew Hay)