* Euro hits 15-month high of $1.4521 on EBS
* Dollar/yen, euro/yen regain some ground after sell-off
* Focus on Obama speech later in session
(Adds quotes, updates prices)
By Gertrude Chavez-Dreyfuss
NEW YORK, April 13 (Reuters) - The yen slipped on Wednesday after rising four straight days, as risk appetite improved on global stocks gains, and the currency's downtrend was seen intact as long as risk-taking holds up.
The negative impact on Japan's economy from the recent earthquake should ensure Japanese monetary policy remains ultra-loose for a prolonged period. That should prompt investors to use the yen as a funding currency in carry trades.
There had been a retracement in risky trades the past few days because of Japan's nuclear power crisis and some lingering worries about euro zone debt problems, resulting in yen strength.
Analysts warned that cautious market sentiment could return by Thursday due to U.S. budget and debt ceiling talks, as well as uncertainties about the economic impact of Japan's crises.
"There is a more of a positive risk environment today," said Vassili Serebriakov, currency strategist at Wells Fargo in New York. "But this may change tomorrow, and the yen may be back up. It just goes to show how risk sentiment plays a big part in the currency market."
Currency investors are expected to focus on President Barack Obama's budget speech later in the session especially after a budget showdown last week that almost shuttered U.S. government offices.
The budget debate is likely to get heated in the coming weeks, with the looming debt ceiling expected to be a major issue possibly weighing on the dollar. The U.S. Treasury has estimated the government is about $95 billion away from hitting its debt ceiling and this could be well be reached by mid-May.
Analysts believe the debt limit will be raised eventually, which has happened in recent years.
"The road to that eventuality could be a very bumpy one for the dollar, particularly if foreign investors perceive even a modest increase in the risk a deal on the debt ceiling will not be reached in time," said Bob Lynch, HSBC's head of G10 FX strategy for the Americas, in New York.
The euro, meanwhile, traded flat against the greenback, after earlier hitting a fresh 15-month high.
The single euro zone currency could be vulnerable to pullbacks after racking up about 8 percent gains this year. Overall though, the euro remained supported by the prospect of more interest rate increases by the European Central Bank.
In midday New York trading, the dollar was up 0.1 percent at 83.72 yen after sliding more than 1.2 percent on Tuesday for its biggest one-day fall in four months.
The euro was up 0.2 percent as well at 121.28 yen EURJPY=R>, although it was well below an 11-month high of 123.33 yen hit on Monday.
The euro was little changed at $1.4478, having earlier hit $1.4521, a 15-month peak on EBS trading platform.
Also supporting the euro's positive outlook were comments from ECB Governing Council member Luc Coene. On Wednesday, Coene said the ECB's rate increase last week should not be viewed as an isolated decision. See.
The euro's gains were slowed by persistent option-related offers. Traders said a barrier at $1.4530 was being defended, expiring on Friday. A break above there would target the 2010 highs around $1.4582.
Technical analysts said the uptrend remained intact while the currency is above $1.4250/80 -- the area from which the euro bounced toward current highs. A sustained break above $1.4600 could open up the path for a test of $1.5000.
The options market, however, isn't following the move in spot prices.euro against the dollar, with risk reversals for one-month options still showing a solid bias for "puts". On Wednesday, euro risk reversals were at -1.35.
Analysts said there is a squeeze going on in the options market between market makers, who provide liquidity, and institutional buyers, who seem skeptical that the euro will keep on rising given persistent sovereign debt problems.
(Editing by Andrew Hay)