* Profit-taking and stops help lend dollar support
* But weakness likely to persist on Fed easing expectations
* DXY may test trendline near 76.00, then 2009 low of 74.17
* 76.4 pct retrace of euro's 2009-2010 drop lies at $1.4374
By Masayuki Kitano
TOKYO, Oct 15 (Reuters) - The dollar edged higher on Friday, pulling away from a 10-month low hit against a basket of currencies the previous day as investors trimmed short positions in the greenback following its recent slide.
The Australian dollar fell 0.3 percent to $0.9913, moving away from the previous day's 28-year peak of $0.9994, and the euro faltered after hitting its highest in more than eight months against the dollar on Thursday.
Market players, however, said it was premature to think that there had been any sea change.
A trend of dollar weakness was seen as likely to persist on the back of market expectations for the Federal Reserve to unveil additional quantitative easing next month.
"Market players who had piled up one-sided positions such as selling the dollar, on the back of a trend toward U.S. monetary easing are probably locking in some profits," said a trader for a Japanese bank.
"I think this is still in the realm of position adjustment," he added.
The dollar index edged up 0.1 percent to 76.697, up from a 10-month low of 76.259 hit the previous day.
One downside target is near 76.00, roughly where the trendline drawn through lows struck in July 2008 and November 2009 now lies. After that the November 2009 low lies at 74.17.
A focal point later on Friday will be a speech by U.S. Federal Reserve Chairman Ben Bernanke.
SUSTAINED REBOUND UNLIKELY
A sustained dollar rebound seems unlikely at this point, said Koji Fukaya, chief currency strategist at Credit Suisse Securities in Tokyo.
"I think that might be pretty hard, at least until the FOMC," he said, referring to the Fed's policy meeting in November.
One factor that may help temper the dollar's decline, however, is the fact that there has been a pretty hefty accumulation in short dollar positions, Fukaya said.
Data released last week by the U.S. Commodity Futures Trading Commission showed that the value of the dollar's net short position rose to $30.5 billion in the week ended Oct. 5, the largest bet against the dollar since at least June 2008.
The euro fell 0.3 percent to $1.4038, retreating from an eight-month peak of $1.4123 hit on trading platform EBS on Thursday.
The euro is hovering near resistance on weekly Ichimoku charts at $1.4055, and a clear break above that level would be a bullish signal.
One possible upside target is $1.4374, the 76.4 percent retracement of the euro's slide from its November 2009 peak down to a trough hit in June 2010.
The dollar dipped 0.1 percent against the yen to 81.40 yen. The dollar had hit a 15-year low of 80.88 yen hit on Thursday on trading platform EBS, only about 1 yen above its record low of 79.75 yen hit in April 1995.
"There's always a chance (of revisiting the record low) because the market likes to have a target and it might keep pushing until it gets to that point," said Gareth Berry, FX strategist at UBS in Singapore.
"But if we get anywhere close to 80 the BOJ might be tempted to come in - but that's their decision and there are political considerations to take into account, with the G20 around the corner," Berry said.
Japanese Finance Minister Yoshihiko Noda said on Friday that Japan will continue to take decisive steps on currencies if necessary to curb excessive moves in the foreign exchange market.
He said, in response to a question, that Japan would take necessary steps regardless of meetings of Group of Seven or G20 nations.
Group of 20 finance ministers meet in South Korea later in October, which will be followed by a G20 summit next month. (Additional reporting by Koh Gui Qing in Sydney, Hideyuki Sano and Charlotte Cooper in Tokyo and Eric Burroughs in Hong Kong; Editing by Chris Gallagher)