* Dollar sells off vs euro on Fed statement
* Dollar falls below 85 yen (Recasts, adds details and quotes; updates prices)
NEW YORK, Sept 21 (Reuters) - The euro rallied more than 1 percent against the dollar on Tuesday, rising to a six-week high after the Federal Reserve said it stood ready to provide additional support to bolster a modest economic recovery.
The dollar also fell below 85 yen as investors fled the greenback.
The Fed statement suggested the U.S. central bank may be preparing to do more to keep unemployment from rising and prices from falling. The sentiment confirmed investors' fears ahead of the meeting.
The Fed made no shift in monetary policy at the end of a one-day meeting, although it expressed somewhat greater concern about the sluggish pace of economic growth and uncomfortably low inflation than it had when it last met in August. For more, see: [ID:nN20109053].
"Bottom line, the Fed may have to do more in terms of stimulus before the end of the year and that is obviously pushing yields lower," said Joe Manimbo, currency trader at Travelex Global Business Payments in Washington. "In turn it makes returns on dollar-denominated assets even less attractive."
In mid-afternoon trading in New York, the euro was up 1.4
percent at $1.3246
As long as the euro holds above the $1.3030 area, some technical analysts see its Aug. 6 high of $1.3334 on EBS as an upside target. The high according to Reuters data that day was $1.3333.
The euro also breached technical resistance at its 200-day simple moving average, which came in at $1.3218 at current prices.
Long-term moving averages are stronger resistance levels in this instance. Once breached, the new level would become long-term support for the currency.
The 14-day simple moving average crossed the 50-day simple moving average, using Reuters analytics, which is also bullish for the euro in the near term,
"It seems that the U.S. economy is at that point where the Fed is actually closer to easing monetary policy," said Nick Bennenbroek, head of FX strategy at Wells Fargo in New York. "So we have seen the dollar sell off against the euro."
INTERVENTION FEARS
The Fed statement also sent the dollar lower against the yen, at one point pushing it below 85 yen after breaking through stop-loss orders around 85.20 yen .
The dollar was last 0.4 percent lower at 85.35 yen
The dollar has failed to climb above its post-intervention high of 85.94 yen set last Friday on the EBS trading platform, capped by Japanese exporters selling ahead of their half-year book-closing on Sept. 30.
Some analysts do not rule out another push by Japanese authorities to push the greenback above 86 yen. Many had doubted they would let the dollar fall below 85.00. (Reporting by Nick Olivari; Additional reporting by Gertrude Chavez-Dreyfuss and Vivianne Rodrigues; Editing by Dan Grebler)