* Dollar index support at 77.60, euro eyes $1.3895
* Greenback struggles above 83 yen, wary of intervention
By Charlotte Cooper and Hideyuki Sano
TOKYO, Oct 6 (Reuters) - The dollar held near eight-month lows on the euro on Wednesday and ground towards last month's 15-year trough on the yen, weighed down by heightened expectations of Federal Reserve easing after Japan lined up its own reflation tools.
Adding to speculation that the Federal Reserve will resume quantitative easing possibly as soon as its November policy meeting, Chicago Fed President Charles Evans was quoted as saying the central bank should do much more to spur the economy.
The dollar held less than half a yen above September's 15-year low of 82.87 yen, supported by jitters that Japanese authorities could intervene again if it retested that level, after last month's yen-selling intervention.
It was also teetering above an eight-month low against a basket of currencies, with an important support level at 77.60-61, which if it gives way opens the door to 76.60, its low in January and the index's weakest level this year.
Matthew Strauss, a senior FX strategist at RBC Capital Markets, said the market seemed to have divided currencies into two groupings of QE and non-QE, with the yen, the dollar and sterling in the first group and the euro the most prominent in the second.
"Additional QE measures in one of these 'member' countries are seen as increasing the risk of further QE in the other 'QE member' countries," Strauss wrote in a client note.
The risk-on mood from expectations of more funds pumped into assets helped Asian shares rise and also kept a lid on U.S. bond yields, with the Treasury market expecting the Fed to make new bond purchases. Falling yields have added to pressure on the dollar as returns have become less attractive.
The euro gained 7.6 percent last month as Fed easing speculation hotted up, even though the market is still wary of sovereign and banking risks in peripheral euro zone economies.
It held steady at $1.3842, near an eight-month high of $1.3860 set on Tuesday.
On the charts its next target is $1.3895, a 61.8 percent retracement of its fall from above $1.51 late last year to its June low. It then has its 200-week moving average at $1.3920 as the next resistance levels and support sits at $1.3790-1.3805.
FED VS BOJ
The dollar dipped as far as 83.07 yen before pulling up to 83.15, and fell back to Tuesday's 2 ½ year low against the Swiss franc at 0.9645 francs.
The greenback is well down from the high of 83.99 yen it hit after the BOJ announced its easing steps on Tuesday.
The BOJ lowered the range on its overnight call rate target, and said it would create a 5 trillion yen ($60 billion) pool of funds to buy assets to shore up the economy, a move analysts said it could expand later if needed to counter fallout from more Fed easing.
"It's really going to be a struggle between Fed easing and BOJ easing and whoever wins that contest is going to dictate the direction of dollar/yen," said Gareth Berry, currency strategist at UBS in Singapore.
One prop trader at a Japanese bank said the BOJ's measures had reduced the risk of the dollar falling below 80 yen to revisit its 1995 record low of 79.75 yen.
"Should that become likely, then the BOJ can just say it will buy more assets," the trader said.
Market players also noted that the BOJ had not yet implemented its plan, hence the continued pressure on dollar/yen.
"I think the BOJ's move will have an impact in the longer term. But at the moment they just unveiled the plan and actual money is not out there yet," said Takako Masai, general manager of capital markets division at Shinsei Bank. (Contribution by Reuters FX analyst Krishna Kumar in Sydney; Editing by Joseph Radford)