Yen selling pauses but more weakness in store

TOKYO, Apr 17 (Reuters) The yen hung near a record low against the euro and a seven-week trough versus the dollar on Tuesday and was expected to stay pressured after the Group of Seven appeared to give a green light for yen selling.

The euro traded around 161.85 yen not far from an all-time high 162.43 yen touched on Monday, when the yen tumbled across the board after G7 finance officials at the weekend glossed over the issue of the yen's recent weakness.

''The yen remains weak,'' said Tomoko Fujii, a senior economist and strategist at Bank of America in Tokyo.

''The G7 was a non-event, and thus far we've seen nothing to stop the move'' to sell yen, she added.

The high-yielding Australian dollar traded just below 100 yen a level last hit 10 years ago, while the New Zealand dollar hit its highest against the Japanese currency in roughly 17 years on Monday.

Analysts expect the yen will keep struggling as investors dump it for higher-yielding currencies and assets as part of trading strategies such as the carry trade.

They added that the euro will continue to climb on the view that the European Central Bank may raise rates in June and beyond.

This view helped the euro to stay strong against the dollar, which traded around $1.3530 little changed on the day and hovering near a two-year high around $1.3570 hit on Monday.

The dollar was down a little at 119.60 yen but stayed near a seven-week high hit on Monday as market participants said yen weakness was outweighing softness in the dollar, which has been hit by the view that the Federal Reserve may cut rates later in the year.

The U.S. currency stayed on the back foot against other high-yielding currencies such as sterling, which traded near its highest level since 1992, and the Australian dollar, which hit a 17-year peak on Monday.

Traders awaited U.K. data on inflation due later in the day to see whether rising consumer prices may prompt the Bank of England to raise rates to 5.5 percent as soon as in May, which would take its rate above the Federal Reserve's 5.25 percent.

Also in focus will be U.S. consumer price figures and housing starts data on Tuesday, as market participants will want to see if price pressures are rising even as the housing market keeps slowing, which may have a negative impact on the economy.

REUTERS AD PM0741