By Hideyuki Sano
TOKYO, Sept 16 (Reuters) - The yen crept higher but remainedunder pressure on Thursday with the market on the alert for moreintervention by Japanese authorities after a massive yen-sellingcampaign the previous day caught many off guard.
Dealers said the Bank of Japan spent $20 billion or moreworth of yen on Wednesday to weaken the currency against thegreenback, which staged its biggest daily gain against the yen inalmost two years.
Japanese Prime Minister Naoto Kan reiterated on Thursday thatJapan would take decisive steps on yen rises if needed, Jiji newsagency reported.
The dollar traded at 85.50 yen, down about 0.3 percent fromlate U.S. levels on sporadic sales from Japanese exporters. Butit has not strayed far from Wednesday's high of 85.78 yen hit onelectronic trading platform EBS.
The U.S. currency rose more than 3 percent on Wednesday froma 15-year low of 82.87 yen struck just before Tokyo stepped intothe market.
Traders have said Japanese exporters wanted to sell thedollar above 85 yen before their half-year book-closing at theend of September, which helped to drive the yen's relentless risebefore the intervention. Some may now eye a higher level to sell.
"Looking at the dollar's surge yesterday, some Japaneseexporters may want to wait a bit more before they sell thedollar," said Teppei Ino, analyst at Bank of Mitsubishi-TokyoUFJ.
POSITIONS BUILDING UP
There seems to be some build-up of long dollar/yen positionsas traders speculate that more yen-selling intervention may be inthe offing, said a trader at a major Japanese bank.
Institutional investors may hold back from selling the dollaragainst the yen in anticipation of a further rebound in thedollar, said Kimihiko Tomita, the head of forex at State StreetGlobal Markets.
"According to our data, institutional investors have startedto close their yen-short/dollar-long positions since mid-August,which I think has helped to accelerate the yen's rise.Intervention could make those investors think twice about closingtheir positions," he said.
Yet the dollar faces many resitance levels on the upside aswell, starting with its 20-day upper Bollinger Band around 85.80.Another resistance level is seen around 86.30, where the bottomof an Ichimoku cloud sits on Thursday.
The market will be looking to U.S. Treasury Secretary TimGeithner's testimony before the Senate Banking Committee at 1400GMT as Japan's intervention could have complicated his efforts topersuade China to let the yuan appreciate.
Any criticism from Geithner on Japanese intervention couldspark speculation that Japan may scale back its activity, dealerssaid.
On Wednesday, U.S. lawmaker Sander Levin, who chairs the U.S.congressional committee examining China's currency policy,described Japan's intervention as "deeply disturbing".
Geithner will tell lawmakers in prepared testimony thatChina's yuan currency has risen too slowly and he is examiningwhat tools may be needed to persuade Beijing to move faster.
The euro traded at 111.05 yen, down about 0.5 percent on theday and off a one-month high of 111.63 yen struck on Wednesday. (Editing by Edmund Klamann)