(Repeats to fix table)
* Fed Chairman Bernanke sees case for more policy easing
* Aussie dollar rises above parity for 1st time since 1983
* Euro retreats from 8-1/2-month high; dips below $1.40 (Updates prices, adds quote, details)
By Wanfeng Zhou
NEW YORK, Oct 15 (Reuters) - The U.S. dollar rose from a more than eight-month low against the euro on Friday as traders said its recent declines were overdone, but a sustained rebound seemed unlikely given expectations of further monetary easing.
The Australian dollar
Analysts said the dollar is likely to stay on the defensive until the Fed's Nov. 2-3 meeting. The downside may be limited, however, as much of the impact from additional Fed asset purchases has been priced into the market and bearish sentiment on the dollar has reached extreme levels.
"The dollar is somewhat oversold against a number of its key counterparts, but I don't really see much scope for sustained dollar gains ahead of the Fed meeting in November," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange Inc in Washington.
The euro fell as low as $1.3971 on trading platform EBS
Upside targets for the euro include a late January high at $1.4195 and then $1.4374, the 76.4 percent retracement of the euro's slide from its November 2009 peak down to a trough hit in June.
The dollar index <.DXY>, which tracks the greenback against a basket of six currencies, was up 0.3 percent at 76.490, after falling as low as 76.144, the weakest in 10 months.
Weakness in the U.S. currency pushed the Australian dollar above the one-to-one level earlier on Friday for the first time since the Aussie was floated in 1983. For details, see [ID:nN15180428]
The Aussie dollar last traded at US$0.9872, down 0.71 percent.
RISK OF DISAPPOINTMENT
Bernanke gave no details on the central bank's next step but said policymakers were still weighing how aggressive they should be. He also suggested the Fed could indicate a willingness to hold interest rates low for longer than currently expected. [ID:nLDE69E1ST]
"The crux of the issue now is how big ... the initial phase of QE2 would be," said Mike Moran, senior currency strategist at Standard Chartered in New York.
"The actual size could be open-ended. In that sense, I think there is some risk of disappointment in terms of how much information we're likely to get from the Fed when they do announce the second round of QE," he added.
Analysts said the dollar could see a rebound if the Fed announces asset purchases of less than $1 trillion or takes a more gradual approach after its November meeting, which would disappoint some market participants hoping for action to ease concerns about a debasement of the dollar.
The dollar could also rise after the Fed meeting in a "sell the rumor, buy the fact" reaction, traders said.
Declines in some major U.S. stock indexes also hit investors risk appetite and provided some safe-haven demand for the dollar, analysts said.
The dollar dipped 0.1 percent to 81.37 yen
The U.S. Treasury Department has decided to delay a much-anticipated report about whether to label China or any other foreign country a currency manipulator, a Senate aide said on Friday.
We are "hearing they will delay its release," the Senate aide said, speaking on condition he not be identified.[ID:nWBT014198]
The U.S. administration faces a tough call on whether to label China a currency manipulator, a move that could throw a wrench in Sino-U.S. relations.