* Greenback supported by rise in U.S. bond yields
* Dollar slips slightly, selling by model player cited
* BOJ meeting seen having limited impact on yen
* Kiwi recovers from 3-week low after RBNZ statement
By Hideyuki Sano
TOKYO, Oct 28 (Reuters) - A short-covering bounce in the dollar paused on Thursday, but traders said a rise in U.S. Treasury yields could prompt more buybacks in the greenback before the Federal Reserve's policy meeting next week.
U.S. bond yields have risen this week partly as euphoria over the Fed's likely asset purchase programme is being replaced by doubts over the size of such a move.
"A model player's buying is pushing up the euro in thin trade. But given that U.S. bond yields have risen, the dollar will go in the same direction in the near term," said a trader at a Japanese brokerage.
The dollar's fate has had a close correlation with U.S. yields and their gap with rates on other currencies, as increases in U.S. yields -- other things being equal -- tend to help the greenback by making dollar investments more attractive.
With the gap between Japan and U.S. two-year yields near a three-week high and that for 10-year yields at a 2-½ month high, dollar/yen could have further room to rebound, some traders said.
Dollar/yen dipped 0.2 percent on the day to 81.62 yen, but it was still more than a full yen above Monday's 15-year low of 80.41 yen.
It faces strong resistance at 82 yen, which has blocked its advance a few times in recent weeks. Its 21-day moving average was also at 82 yen on Thursday.
Except for a short period after Japan intervened in currency markets on Sept. 15, the dollar has been mostly stuck below the 21-day average line since its decline in June, and a rise above 82 yen could ignite more buybacks in the dollar.
But market players also note that Japanese exporters, a growing number of which have recently been lowering their target levels for selling the dollar, are likely to take advantage of any rebound in the U.S. currency.
"There will be sizable dollar offers from Japanese exporters at 82 yen and 82.50 yen at the end of month. I expect the dollar's rebound to be capped around 82.50 yen at best," said Daisuke Karakama, market economist at Mizuho Corporate Bank.
The Bank of Japan is holding a one-day policy meeting on Thursday.
Although it may unveil the details of its 5 trillion yen ($61 billion) asset purchase scheme, it is unlikely to garner much attention, market players said.
"This is peanuts compared to the Fed's $2 trillion balance sheet," said Karakama.
The euro fetched $1.3811, up 0.3 percent on the day but still down about 270 pips from Monday's high of $1.4080.
It may have support at $1.3724, its daily ichimoku kijun line. Another support level is its Oct. 20 low of $1.3697.
Many analysts say the gap between euro zone and U.S. short-term rates means the euro is unlikely to fall below $1.35 in coming months.
"We suspect the Fed will confirm that medium-term deflation risks still justify easing, and with 10-year rates now above Jackson Hole levels, the resulting rally in bonds should soften the dollar again," JPMorgan analyst Justin Kariya said in report.
A Reuters poll showed Wall Street analysts expect the Federal Reserve to buy between $80 billion and $100 billion worth of assets per month under a new programme widely expected to be unveiled on Nov. 3.
The New Zealand dollar, managed to brush aside a Reserve Bank of New Zealand decision to hold rates steady at 3 percent and recovered from a three-week low.
Traders appeared to take comfort from the New Zealand central bank's remarks that rates would still head higher at some point. The market expects rates to rise to 4 percent by the end of next year.
The kiwi rose to around $0.7475 from a three-week low of $0.7406 hit just before the statement from the Reserve Bank of New Zealand. ($1=81.69 Yen) (Additional reporting by Koh Gui Qing in Sydney; Editing by Chris Gallagher)