* Bernanke says jobless rate to remain high
* Caterpillar posts strong Q2 earnings
* Bank of Canada holds rates steady
(Recasts, updates prices, adds quotes, Bernanke testimony)
By Gertrude Chavez-Dreyfuss
NEW YORK, July 21 (Reuters) - The U.S. dollar extended losses against the yen on Tuesday, but trimmed losses versus the euro after Federal Reserve chairman Ben Bernanke gave what some analysts saw as a less than upbeat assessment on the U.S. economy.
That curbed risk appetite, which had improved the last few sessions after a string of stronger-than-expected U.S. corporate earnings for the second quarter.
Bernanke, in his testimony before the House Financial Services Committee, said unemployment was likely to remain high into 2011 and warned that this could undermine consumer confidence and derail a recovery.
Investors sold the euro against the dollar "because (Bernanke) wasn't nearly as bullish as he usually is," although this may be a fairly limited move," said Boris Schlossberg, director of FX research at GFT in New York.
"The Fed has zero intention of tightening monetary policy anytime in the near future. They want to keep the conditions in place to sustain this fragile economic recovery. I expect rates to stay stationary throughout this year and well into the next."
In mid-morning New York trading, the euro traded little changed at $1.4223 versus the dollar after earlier rising to six-week highs at $1.4277, according to Reuters data.
The dollar fell 0.5 percent against the yen to 93.66, while the ICE futures' dollar index was down 0.2 percent at 78.7721. Earlier, the index had fallen to 78.591, its lowest since early June.
Overall, Bernanke's remarks provided few surprises, analysts said, especially after the article he wrote for the Wall Street Journal article said the Fed does have an exit strategy plan from the bank's quantitative easing.
But Bernanke's comments on unemployment and consumer spending undercut gains in the euro and high-yielding currencies such as the Australian and New Zealand dollars.
Earlier in the day, investor appetite for risk was evident in equity markets especially after Tuesday's generally strong earnings. Caterpillar, for instance, posted a second-quarter profit and gave an upbeat earnings outlook for 2009.
The U.S. dollar, meanwhile, fell against the Canadian dollar to C$1.1017, down 0.5 percent, after the Bank of Canada left interest rates at a historic low of 0.25 percent and gave an upbeat economic forecast.
(Additional reporting by Vivianne Rodrigues) (Editing by Theodore d'Afflisio)