* Rising US yields pushes dollar/yen to near 2-month high
* Moody's cut of Greece's rating weighs on euro
* U.S. existing home sales surge, but Q3 GDP revised lower (Updates prices, adds comment)
By Wanfeng Zhou
NEW YORK, Dec 22 (Reuters) - The dollar rose on Tuesday to its highest level in nearly two months against the yen as U.S. bond yields rose on expectations for U.S. economic growth.
The euro also slipped against the greenback, hovering near a 3-1/2-month low after U.S. ratings firm Moody's cut Greece's debt rating.
U.S. existing home sales surged last month as prices continued to fall, data showed on Tuesday. The report offset a sharper-than-expected downward revision to U.S. third quarter growth and boosted optimism about a recovery in the world's largest economy.
"We're testing significant lows in the euro as a result," said Brian Dolan, chief currency strategist at Forex.com in Bedminster, New Jersey. "The dollar's also up on the Japanese outlook and the backup in U.S. yields," he added.
The dollar was last up 0.7 percent at 91.75 yen after touching as high as 91.82 yen, according to Reuters data, its strongest since late October.
Expectations for stronger U.S. growth boosted U.S. Treasury yields and further widened the spread between short-term U.S. and Japanese government bond yields, providing an impetus for traders to bid up the dollar against the yen.
In Japan, Bank of Japan Governor Masaaki Shirakawa said on Monday the bank will maintain its current "effective zero interest rates" and is ready to act promptly to fight deflation.
"There's some focus yesterday on the potential for the use of quantitative easing in Japan in order to fight deflation and that pushed dollar/yen higher," said Camilla Sutton, senior currency strategist at Scotia Capital in Toronto. "Technically we already started to move higher, and that just added fuel to the fire."
The spread between the yields on the U.S. two-year note and Japan's two-year bond has widened to about 70 basis points from 48 bps at the start of the month.
The euro was down 0.3 percent on the day at $1.4242, pressured after Moody's cut Greece's rating by one notch to A2 from A1, which was Greece's third downgrade by a major agency this month.
Concerns about the problems surrounding peripheral euro zone countries had weighed on the euro, particularly Greece, whose sovereign debt rating already had been downgraded by Fitch Ratings and Standard & Poor's.