* Yen down from Tuesday's 18-month high vs dollar
* Short-covering seen helping support dollar/yen
* Dollar index pulls away from Tuesday's 15-month low
By Masayuki Kitano
SINGAPORE, May 4 (Reuters) - The yen slipped from an 18-month high against the dollar on Wednesday, losing some steam as position squaring set in after its sharp rally since last week.
The dollar rose 0.6 percent to 107.22 yen JPY= , pulling away from Tuesday's low of 105.55 yen, the dollar's weakest level since October 2014.
The dollar's gains against the yen came in thin market conditions, with Japanese markets closed on Wednesday and Thursday for public holidays.
The dollar could see some whippy trading against the yen over the next couple of days until Tokyo market players return from their holidays, said Satoshi Okagawa, senior global markets analyst for Sumitomo Mitsui Banking Corporation in Singapore.
"We could see some pretty high volatility," Okagawa said, adding that the greenback could see swings in the 107.50 yen to 105.55 yen area in the near term.
Market participants attributed the yen's pullback to position squaring in the wake of its sharp recent rally.
Last week, the yen saw its biggest weekly gain since 2008 - more than 5 percent against the dollar - as the Bank of Japan held off from expanding its stimulus.
The yen has also gained ground as market participants harbour doubts as to whether Japan will intervene in the market to stem the yen's gains given wider opposition to such moves globally.
In a report last week, the U.S. Treasury Department called current dollar-yen conditions "orderly" - widely interpreted as a signal to Japanese officials not to intervene to weaken the yen.
Position squaring ahead of U.S. jobs data later in the week is probably supporting the dollar against the yen for now, said Stephen Innes, senior trader for FX broker OANDA in Singapore.
"There's a huge, huge short position built into dollar/yen right now," Innes said.
U.S. Commodity Futures Trading Commission data shows that speculators held a net long position in the yen totalling 66,498 contracts in the week ended April 26. That was near the previous week's 71,870 contracts, which was the most bullish positioning in the yen since Reuters records began in March 1995. IMM/FX
The dollar was generally firmer after rebounding from lows set on Tuesday.
Against a basket of six major currencies, the dollar edged up 0.2 percent to 93.168 .DXY . On Tuesday, the dollar index had hit a low of 91.919, its weakest level since January 2015.
The euro fell 0.1 percent to about $1.1484 EUR= , pulling away from Tuesday's high of $1.1616, its strongest level since August.
The Australian dollar regained some ground after it hit a seven-week low of $0.7467 earlier on Wednesday. The Australian dollar last traded at $0.7504 AUD=D4 , up 0.3 percent.
The Aussie had tumbled nearly 2.4 percent on Tuesday after the country's central bank cut interest rates for the first time in a year, and as commodity prices fell.
Later on Wednesday, the focus will be on U.S. economic indicators such as a report on private employment and an industry report on the U.S. services sector. ECONUS
(Editing by Sam Holmes and Kim Coghill)