FOREX NEWS - Yen bounces from recent lows, euro firmer

* USD/JPY dips on month-end exporter selling * Euro rises on hopes of a Greek debt breakthrough * Aussie, NZD near 3-month peaks, await US GDP data By Anirban Nag LONDON, Jan 27 (Reuters) - The yen was on track topost its biggest daily gain in a month against the dollar onFriday, recouping most losses made earlier this week as hedgefunds bought the currency, while the euro edged up on hopes of abreakthrough in Greek debt talks. Athens is locked in talks with its private creditors torestructure its debt and needs a deal quickly to avert an unrulydefault when a major bond redemption comes due in March. TheEuropean Union's top economic official Olli Rehn said a deal waslikely at the weekend, giving a leg up to the euro. Greece's creditors are demanding the European Central Bankcontribute to a deal to put the country's finances back ontrack. Despite the euro's bounce, most investors are cautiousabout adding euros to their portfolios in a big way on worriesPortugal may follow Greece and seek another bailout. Yields on Portuguese government bonds set fresh euro-erahighs on Friday, extending their recent rise. That kept the euro off five-week lows struck against thedollar on Thursday. It was last trading 0.3 percent higher onthe day at $1.3135, having tripped stops above $1.3120.On the downside, traders cited bids at $1.3070 and $1.3050. "Investors seem to have grown used to Greek debt swap talksdragging on," said Ankita Dudani, G10 currency strategist atRBS. "What the real risk for the euro is contagion from adisorderly Greek default and whether Portugal needs anotherbailout." The euro underperformed against the yen, with the commoncurrency down 0.3 percent at 101.15 yen as theJapanese currency recovered broadly from lows struck this week. The dollar fell to 76.895 yen on EBS and came closeto support at a trendline off its Oct. 31 low at 76.70 yen.Traders said Japanese corporates sold the dollar which had beendrifting lower after hitting a two-month high this week. This prompted hedge funds to follow suit, pushing thegreenback through support at its 100-day moving average of 77.20yen. The dollar was last trading at 77.05 yen, down 0.5percent on the day. The dollar hit a two-month high of 78.29 yen on Wednesdayafter Japan reported its first annual trade deficit since 1980,but the rally stalled right below resistance at its 200-daymoving average. Dudani of RBS said with interest rate differentials movingin favour of the yen after the Federal Reserve's pledge to keeprates low for longer than previously suggested, the dollar waslikely to stay subdued against the Japanese currency. Deutsche Bank strategists said they did not see the recentlosses in the yen as a trend reversal and expected dollar/yenand euro/yen to reach news lows during the course of the year. CARRY TRADES However, analysts said the dollar was unlikely to stay underpressure against the euro after some of the extreme bearishpositions against the common currency had been pared. Chris Turner, chief FX strategist at ING, said investorswere underestimating the risks of a domino effect from Greece. "Portugal could be a catalyst for a weaker euro inFebruary," he said. "The troika will be reviewing Portugal'sadherence to its bailout package, while bond investors arealready pricing a restructuring of Portuguese debt." He added the euro looks a sell at $1.3130/50 levels for abreak of channel support at $1.3020. Still, the Fed's decision encouraged the use of the dollarin carry trades and sparked big gains for commodities like goldand copper. The greenback has been on the back foot since the U.S. Fedpledged on Wednesday to keep rates near zero for the next threeyears. The dollar index was down 0.23 percent at 79.16,not far from a six-week low of 79.067. That pledge to keep rates ultra low and expectations thatthe European Central Bank will inject large amounts of fundsnext month also supported commodity currencies, with theAustralian and New Zealand dollars hovering near three-monthhighs. The kiwi has been a clear outperformer this monthwith a gain of 5.8 percent, while the Aussie has addedmore than 4 percent. Growth-linked currencies could get a boost from U.S. GDPnumbers for the fourth quarter. Forecasts are for an expansionof 3 percent from a year earlier which would be a sharpacceleration from 1.8 percent growth in the prior three monthsand the quickest pace since the second quarter of 2010.