FOREX-Dollar struggles before Fed meeting, AUD shines

* Dollar index slides on speculation Fed may suggest more QE

* Aussie rallies after hawkish comments from RBA's Stevens

* Dlr/yen little changed, investors wary of intervention

(Adds comment, updates throughout; previous SYDNEY)

By Naomi Tajitsu

LONDON, Sept 20 (Reuters) - The dollar slipped broadly on Monday on speculation the Federal Reserve may flag the need to inject more stimulus into the struggling U.S. economy when it announces its latest policy decision on Tuesday.

Against the yen, the U.S. currency was little changed, trading in thin ranges due to a market holiday in Japan and as investors were cautious of taking big yen positions following Japan's intervention last week.

The prospect the U.S. economy may require more quantitative easing -- often seen as currency-negative -- highlighted differences in monetary policy outlooks among major central banks, with the Australian dollar rallying on hawkish remarks from the Reserve Bank of Australia. [ID:nSGE68J073]

The Fed is widely expected to refrain from implementing new steps to ease monetary policy on Tuesday, while renewing its promise to keep its portfolio of assets from shrinking.

"The consensus is that the Fed won't do anything tomorrow, but if they indicate that more QE may be on the way, it would send a strong signal to sell the dollar during the week," said Kasper Kirkegaard, currency strategist at Danske in Copenhagen.

By 0737 GMT, the U.S. currency had fallen 0.4 percent against a currency basket, taking the dollar index down to 81.059 <.DXY>, near a five-week low hit last week.

The Australian dollar rose 1.1 percent to $0.9464, boosted after RBA Governor Glenn Stevens said he was prepared to use interest rates to help manage strong growth in the economy.

This suggested Australian rates will continue to rise, which would boost the rate advantage held by the country's currency.

The euro rose 0.5 percent to $1.3117.

A 0.8 percent rise in European shares <.FTEU3> helped the single currency recover from a slide late last week. It fell after speculation Ireland may turn to the IMF for assistance.

While such speculation was blasted by the Irish government it highlighted the fragility of some countries in the euro zone, and analysts say such issues may come back to haunt the euro.

SEK SLIPS AFTER ELECTION

The dollar traded at 85.62 yen, barely moving from late last week after Japan authorities massively sold yen for dollars to curb yen strength, pull the U.S. currency up from a 15-year low.

Further gains were capped by its 55-day moving average, which came in at 85.88 yen on Monday, and investors were focused on whether the dollar would break above 86.00 yen.

In addition to the prospect of more yen intervention, recent strength in the currency may subside as speculators cut long yen positions, or bets the currency will appreciate.

The latest CFTC data shows net long yen positions fell to 47,642 as of last Tuesday, the day before Japan entered the market, from 52.183 the previous week. Still, speculators continue to increase bets on more dollar weakness. [IMM/FX]

Graphic on positioning data http://r.reuters.com/kus26k

The Swedish crown slipped against the euro in the aftermath of a Swedish election on Sunday which resulted in a hung parliament after the centre-right government won a second term but was deprived of an outright majority. [ID:nLDE68J007]

Analysts said the political uncertainty was unlikely to have a big impact on demand for the crown.

The crown has been the darling of the currency market due to Sweden's strong economic fundamentals and fiscal position, and on the view that Swedish interest rates will continue to rise.

"SEK has weakened modestly and may continue to do so on further unwinding of the primarily long speculative position," SEB said in a note.

"The long-term appreciation trend is however intact as the economic policies will remain by and large unchanged."

(Graphic by Scott Barber)