* US dollar index slides to lowest since early November
* Fed's Bernanke unlikely to signal exit from loose policy
* Expectations of a hawkish ECB support euro; eyes $1.40
(Updates prices)
NEW YORK, Feb 28 (Reuters) - The U.S. dollar slipped to a 3-1/2-month low against major currencies on Monday and may extend losses on speculation Federal Reserve Chairman Ben Bernanke will continue to support stimulative policy.
The euro hit a near one-month high above $1.3850 ahead of an interest-rate meeting by the European Central Bank on Thursday. The euro could make a run toward $1.40, traders said, should the ECB maintain a hawkish tone on inflation.
Bernanke testifies to Congress on Tuesday and Wednesday. Analysts expect him to stick to his recent economic assessment that the recovery is strengthening but not enough to bring about a significant improvement in the jobs market, suggesting the time is not ripe for U.S. rates to rise.
"The dollar is remaining on its back foot because other central banks are turning more hawkish but the Fed is not," said Amelia Bourdeau, senior currency strategist at UBS in Stamford, Connecticut.
"We don't think (Bernanke) will change his outlook for the economy. He will emphasize that the Fed has the tool to exit quantitative easing but is not going to do so yet," she added.
The U.S. dollar index, which tracks the greenback's performance against a basket of major currencies, declined to 76.756, its lowest level since Nov. 9.
Traders said the move below the February trough of 76.881 triggered fresh-selling by "model" accounts, which are based on computer-generated trading recommendations.
The euro gained 0.4 percent to $1.3802, after earlier rising as high as $1.3857 on trading platform EBS, its strongest since the start of the month. Technical analysts said a break of the euro's February high at $1.3862, also the highest since early November, was needed for added momentum.
The euro has gained 0.8 percent versus the dollar in February and is up about 3 percent so far this year after recent inflation-fighting rhetoric from ECB officials boosted expectations euro zone interest rates will rise faster than those in the United States.
Annual euro zone inflation hit a more than two-year high of 2.3 percent in January, the second month in a row that it has been above the ECB's target. Inflation will likely rise further in February due mainly to more expensive oil. Against the yen, the dollar rose 0.2 percent to 81.79, but was down about 0.4 percent this month.
HIGHER OIL
Soaring oil prices also weighed on the dollar in recent sessions as investors fret the U.S. economy is more vulnerable to higher energy costs, given its strong reliance on consumer spending for growth.
Brent crude oil futures earlier rose more than $2 per barrel as protests in Oman fueled wider concern about security of supply from the Middle East after uprisings in Libya dramatically reduced exports from North Africa. "The ECB sees rising crude as an upside risk to inflation rather than the Fed's view that it will be negative for growth. This is increasing the risks of a near-term overshoot for the euro," said Lee Hardman, currency analyst at BTM-UFJ in London.
However, St. Louis Federal Reserve President James Bullard said on Monday that rising oil prices are not currently a drag on the recovery. He repeated comments he made last week that he would like to dial back the Fed's $600 billion bond buying program. Bullard is not a voting member. See Some analysts said the euro is vulnerable to profit-taking. Data from the Commodity Futures Trading Commission showed speculators boosted bets in favor of the euro to the highest since October in the week ended Feb. 22.
Euro and Canadian dollar long positions in U.S. dollar terms accounted for $14.7 billion, around two-thirds, of the total $22.4 billion U.S. dollar short position.
Expectations for strong U.S. jobs data for February, due out Friday, could also limit the euro's upside. The dollar was little changed at 0.9290 Swiss franc, not far from a record low of 0.9229 hit on EBS last week. The dollar lost about 1.6 percent this month against the franc as tensions in the Middle East and Africa boosted safe-haven demand for the Swiss currency.
(Reporting by Nick Olivari and Wanfeng Zhou; Editing by Andrew Hay)