TOKYO, Sep 13 (Reuters) The dollar limped up from a 15-year low against a basket of currencies on Thursday as investors took profits on its slide on expectations the Federal Reserve will start cutting interest rates next week.
The Fed is widely seen cutting rates by 25 or 50 basis points from 5.25 percent at Tuesday's meeting to stave of a deeper economic slowdown and help relieve a squeeze in money markets, a move that would erode the dollar's yield appeal.
As some markets, such as equities, show signs of calming from the upheaval of the past few months on worries about funds suffering losses from U.S. subprime mortgages, the focus has shifted back to the U.S. economy's housing-led deterioration.
The dollar has slid below the 80 level on the trade-weighted index against six major currencies as investors have shunned the U.S. currency, driving the euro to an all-time peak above $1.39 and the Canadian dollar near a 30-year high.
But traders said the dollar was getting a slight lift in Asia as investors took profits on its steady slide, even as the outlook remained negative.
Currency strategists at JPMorgan Chase said the euro may struggle to extend gains if the Fed cuts rates by just 25 basis points and if oil prices fall back from their record peaks, but ''very short-term momentum could easily rule the day''.
JPMorgan Chase said the next technical resistance for euro/dollar is $1.3940 before trying to top $1.40.
The euro slipped 0.1 percent from late U.S. trade to $1.3890 after climbing as far as $1.3915 the previous day -- the highest since its launch at the start of 1999.
The dollar index edged up 0.1 percent from late U.S. trade to 79.445 after having fallen as low as 79.319 on Wednesday, taking the index nearer its all-time low of 78.19 hit in 1992.
The dollar rose 0.2 percent to 114.30 yen having held off a 14-month low of 111.60 yen struck last month.
Japanese Prime Minister Shinzo Abe's shock announcement on Wednesday that he will step down had little sustained impact on the yen as the country's ruling party scrambled to find a new leader and avoid a policy vacuum.
The euro climbed a tad to near 158.80 yen The currencies of some commodity producers have also benefited from expectations for bumper exports as oil prices have surged to record highs above $80, giving the Canadian dollar in particular a lift.
The Canadian dollar changed hands at C$1.0375 to its U.S.
counterpart, near a 30-year peak of C$1.0340 struck in July.
Reuters SZ VP0720