By Hideyuki Sano

TOKYO, Sept 21 (Reuters) - The dollar slipped near a
five-week low against a basket of currencies on Tuesday with
traders cautious ahead of a Federal Reserve policy meeting that
may discuss the need for further easing.

Few traders expect the Fed to apply another dose of
quantitative easing (QE) just yet -- and the dollar could gain if
that view proves correct.

But some said the greenback was unlikely to gain any respite
as the central bank would probably signal its readiness to take
QE steps if needed, keeping expectations of more dollar-printing
intact.

"Ongoing speculation of the Fed embarking on another round of
QE is keeping the U.S. dollar under the cosh," said Sue Trinh,
senior currency strategist at RBC in Hong Kong.

"I'm not sure the market's going to get too much resolution
after the FOMC today. Even if they don't signal any imminent QE,
the market's speculation is more focused on the next few months,"
she added.

The dollar index fell 0.2 percent to 81.17 from 81.33 in late
U.S. trade, edging near a five-week low of 80.865 hit last week.

The dollar hugged a tight range against the yen as traders
were wary of pushing the dollar too much lower after Japan
intervened in the market last week for the first time in six
years.

The dollar stood at 85.55 yen, down 0.2 percent on the day
and off its post-intervention high of 85.94 hit on Friday.

More dollar selling by Japanese exporters is expected towards
the 86 yen level before the end of September, when many Japanese
exporters close their books.

In terms of technicals, the dollar/yen's 55-day moving
average, now around 85.85, has been a resistance point after
Japan stepped into the market last Wednesday. It has another
resitance point at around 86.26, where its daily ichimoku cloud
lurks on charts.

"Share prices are rising, so there's no strong reason to buy
the yen at the moment. But on the other hand, there will be yen
buying on any dips (by Japanese exporters)," said a trader at a
major Japanese bank.

The S&P 500 closed at a four-month high on Monday.

The yen's rangebound trade since intervention has helped to
bring down dollar/yen options' implied volatilities. Its one-week
volatility dropped to around 10.65/12.05 percent after having
shot up to close to 15 percent right after intervention.

In short-dated options for up to two weeks, demand for dollar
calls are stronger than dollar puts, meaning dollar calls are
being traded at a premium over yen calls -- an unusual
development as dollar puts are normally more expensive because of
Japanese exporters' hedging demand.

Option traders said dollar calls with strike prices of above
90 have been traded as some market players sought protection
against a possible jump in the dollar in the event of
intervention.

The euro edged up 0.2 percent to $1.3090, less than a full
cent below its five-week high around $1.3160 hit on Friday,
despite renewed worries over some euro zone countries debt
spooked investors.

The common currency has resistance around $1.3220, its
200-day moving average.

The Australian dollar stayed close to its two-year high of
$0.9495 hit on Monday after Reserve Bank of Australia Governor
Glenn Stevens suggested Australian interest rates would rise
further.

The Australian currency rose briefly to as high as $0.9480
after minutes of the RBA's September policy meeting showed the
bank thinks interest rates are likely to rise.

But the rally quickly dissipated as the Aussie had already
jumped one percent on Monday following Stevens' comments.

Talk of a large option barrier at around $0.9500 with expiry
at the end of the month also capped the currency.
(Additional reporting by Charlotte Cooper; Editing by Joseph
Radford)