(Refiles to correct typo in second graph)
* Dollar hemmed awaiting Bernanke for rate outlook
* Euro soft as uncertainty over Greece bailout rises
SYDNEY, Feb 23 (Reuters) - The U.S. dollar consolidated on Tuesday with traders on the sidelines on speculation the Federal Reserve would hose down talk of early monetary tightening, leading some investors to steer clear of the greenback.
San Francisco Federal Reserve Bank President Janet Yellen said the U.S. economy still needs extraordinary low interest rates as inflation is "undesirably low", a view that could be echoed by Fed Reserve chief Ben Bernanke in coming days.
Traders said a view was gathering ground that Bernanke could play down the significance of last week's discount rate hike and emphasize that it did not signal the start of a tightening cycle. Any such signals could lead to some unwinding of huge long positions built on the U.S. dollar in recent weeks.
Bernanke gives testimony to Congress on Wednesday and Thursday. Still, traders say, any fall in the U.S. dollar is likely to be short-lived on the back a growing belief that the U.S. Fed Reserve was likely to move first amongst the major central banks in tightening interest rates.
"The short-term themes remain intact and while additional consolidation can develop," JP Morgan said in a note. "The recent trends for the U.S. dollar are expected to continue and we maintain the short term bullish bias for the dollar."
In early Asian trade, the U.S. dollar index <.DXY> <=USD> was
flat at 80.526, staying well off its recent 8-mth highs. The euro
The euro inched up on the yen
Weekend reports had suggested that a 20-25 billion euro package was being prepared, giving a fillip to the euro.
For details see [ID:nLDE61J05O] and [ID:nLDE61L1HB].
Concerns about heavily indebted euro zone countries and worries whether they will be bailed out have recently hurt the euro, with single currency shedding around 5 percent this year.
The dollar pared some of its losses on the yen, rising to
91.25 yen
The low-yielding yen was amongst the top performers on Monday amid rising uncertainty about the Greek economy. The yen is generally sought after when uncertainty about a global recovery rises.
Traders said expectations of fund repatriation by Japanese companies towards Japan's fiscal year-end in March will also support the yen.
Traders expect the dollar to trade in range ahead of Bernanke's testimony and a slew of U.S. economic data. U.S. house prices for December are due on Tuesday as is the consumer confidence survey for February. (Editing by Wayne Cole)