* Investors scale back risk tolerance
* But market sentiment not necessarily negative
* Lower U.S. yields weigh on dollar (Corrects spelling to Bernanke not Barnanke in first paragraph)
TOKYO, July 22 (Reuters) - The yen rose against other major currencies on Wednesday after Federal Reserve Chairman Ben Bernanke's cautious view on the U.S. economy reduced investors' risk appetite.
Dealers also said the dollar was weighed down after U.S. Treasury yields slipped as Bernanke indicated that the economy is too weak for the central bank to tighten its monetary policy anytime soon.
"Market sentiment is not necessarily bad, with solid U.S. (corporate) earnings," said Yousuke Hosokawa, treasury department senior manager at Chuo Mitsui Trust and Banking.
"With a relatively solid tone of stocks and commodity prices, basically the currency market bias is for a soft dollar," he said.
Bernanke, in testimony before the House Financial Services Committee, said unemployment was likely to remain high into 2011, which he warned could undermine consumer confidence and derail a recovery. He also said benchmark U.S. interest rates will stay low for a long time and expressed concern about the U.S. budget deficit.
The euro fell 0.6 percent from U.S. late trade on Tuesday to 132.53 yen. The European single currency slipped 0.3 percent to $1.4186, after touching $1.4278 on trading platform EBS the previous day, its highest since June 3.
The dollar was down 0.3 percent at 93.44 yen.
The dollar index, a gauge of its performance against six major currencies, was steady at 78.944 after touching 78.591 on Tuesday and Wednesday, its lowest since June 3.
Commodity-related currencies such as the Australian and the New Zealand dollars slipped.
The Australian dollar fell 0.3 percent to $0.8146 after hitting five-week high of $0.8193 on Tuesday. Against the yen it was down 0.6 percent at 76.08 yen.
The New Zealand dollar slipped 0.2 percent to $0.6550 after rising as high as $0.6610 on Tuesday, its highest since early October. It dipped 0.4 percent to 61.20 yen.
Troubled lender CIT Group Inc warned on Tuesday it could file for bankruptcy protection if bondholders reject a debt restructuring. Revived worries over the impact of CIT's possible failure also made investors cautious.
Fed chairman Bernanke will give twice-yearly testimony on the economic outlook and monetary policy before the Senate Banking Committee later on Wednesday. (Reporting by Kaori Kaneko; Editing by Michael Watson)