* EU backs plans to help Greece if needed
* Focus on Fed's economic outlook, possible more dissent
* Yen pressured on speculation of more BOJ easing (Adds comment, updates prices)
By Wanfeng Zhou
NEW YORK, March 16 (Reuters) - The dollar fell against the euro on Tuesday after European Union finance ministers backed plans to help Greece if needed and Standard & Poor's affirmed its ratings on the debt-stricken country.
Expectations the Federal Reserve would reiterate a pledge to keep interest rates very low for a long time also helped lift risk appetite and dented safe-haven demand for the greenback. The U.S. central bank's Federal Open Market Committee was due to issue a policy statement at the close of its rate-setting meeting later in the day.
"You have a slight improvement in risk because of the reported deal from the EU ministers to aid Greece, although the details are unclear," said Michael Malpede, market analyst at Easy Forex in Chicago.
In addition, "You have anticipation that the FOMC is likely to maintain and reaffirm its low yields and 'extended period' language in its policy statement today," Malpede said.
In midday trading, the euro rose 0.6 percent to $1.3747. It climbed to a session high of $1.3771, according to Reuters data, after Standard & Poor's affirmed its ratings on Greece and ended its review for a downgrade, saying the government's recent deficit reduction measures are supportive of the ratings.
S&P, however, said the outlook on the rating is negative, indicating a downgrade is still likely over the long term.
Late on Monday, ministers from the 16-country euro zone said they had agreed on the "technical modalities" that would permit aid for Greece to be rapidly rolled out, but gave no figures and few details. EU finance ministers on Tuesday backed the plans to help Greece financially.
Against the yen, the euro gained 0.5 percent to 124.33 yen.
FOMC AHEAD
The dollar index, a gauge of its performance against six major currencies, was down 0.5 percent at 79.827, with near-term resistance seen around 80.85, its high of March 10.
The Federal Reserve, which will announce its policy decision at about 2:15 p.m. (1815 GMT), is widely expected to hold benchmark U.S. rates near zero percent and repeat that conditions warrant keeping them "exceptionally low" for an "extended period."
Investors will focus on the Fed's assessment of the economic outlook and whether there are more dissenting policy makers who want to drop the reference to an "extended period" after recent economic data showed U.S. consumers are spending more and companies seem ready to hire again.
"The anticipation for the Fed is that they're going to give a slightly more upbeat outlook for the U.S. economy, but at the same time they're going to keep the language intact and not signal any rate increase any time soon," said Brian Dolan, chief currency strategist at Forex.com in Bedminster, New Jersey. "That combination is going to be risk positive."
Investors are also looking to see if the Fed would begin laying the groundwork for a shift in the "extended period" language. The vast majority of primary dealers see a change as early as April.
Still, most do not see an interest rate increase until the second half of this year.
Against the yen, the dollar fell 0.1 percent to 90.45 yen. Repatriation flows by Japanese firms ahead of the financial year-end on March 31 likely benefited the Japanese currency, traders said.
The Bank of Japan ends its two-day meeting on Wednesday and is likely to announce more monetary easing measures, like boosting the size or duration of special fund-pumping operations.
Tensions over China's currency practices brewed after a letter by 130 U.S. lawmakers on Monday called on the Obama administration to get tough with Beijing.
But a U.N. agency report said calls for China to allow its yuan currency to appreciate take no account of the importance of the country's stability for the region and for the world. (Editing by Leslie Adler)