* Dollar recovers vs yen after hitting nearly 4-week low
* Falls vs euro after Fed cuts rate path for coming years
* RBNZ keeps rates steady, retains easing bias (Updates prices, adds comments)
By Patrick Graham
LONDON, Sept 22 (Reuters) - The dollar fell to its lowest in a week against the euro but recovered some ground against the yen on Thursday, after a U.S. Federal Reserve meeting that balanced hints of a rise in interest rates this year with cuts in the longer term outlook.
On balance the Fed's message did not go as far as some in currency markets had expected towards outright promising a rise in borrowing costs by the end of the year.
Allied to a reduction in the number of rate rises it forecasts in 2017 and 2018, that was enough to knock the greenback to a nearly 4-week low of 100.10 yen in Asian trading. JPY=EBS
But there were also already three votes for a rise in rates on the Fed's policymaking committee and the start of the European day brought the dollar back into positive territory, up 0.2 percent from Wednesday's close in New York at 100.61 yen.
"The announcement constitutes a 'hawkish hold'," said Kit Juckes, a strategist with Societe Generale (PA:SOGN) in London.
"There's an opportunity, taking the move down in treasury yields post-FOMC, to go long dollars here, at 100.30, with a tight stop (99.00) on the grounds that I just don't think we can push (U.S. government) TIIPS yields ... much lower."
The euro gained 0.4 percent to $1.1229, its highest since last Friday and taking it firmly back into the middle of a $1.09-$1.15 range it has held since March. EUR=EBS
A stronger yen has been the most consistent trade of the past year among major currencies, backed since January by the growing conviction that the Bank of Japan is running out of ammunition to weaken the currency and get inflation rising.
Wednesday's policy overhaul by Tokyo does not appear to have shifted that conviction, although reaction to its shift to targeting yields on government bonds was volatile. focus on Thursday is a meeting among officials from Japan's finance ministry, Financial Services Agency and the Bank of Japan, which began at 0500 GMT, to discuss issues in global financial markets. market is not convinced that the BOJ is doing enough to boost inflation expectations ... Overall, this does not change our view of yen strengthening off the back of Japan's strong current account surplus," said Heng Koon How, senior FX investment strategist for Credit Suisse (SIX:CSGN).
Jasslyn Yeo, global market strategist for JP Morgan Asset Management in Singapore, believes the dollar will probably head lower against the yen going into the year-end, and expects the greenback could soon fall below its August low of 99.55 yen.
"Yesterday's new (BOJ) framework is not new easing. I think it more represents a softening stance towards banks and other financial institutions likely due to concerns and backlash over profitability and financial stability," Yeo said.
The New Zealand dollar edged 0.2 percent lower to $0.7336 NZD=D3 after the Reserve Bank of New Zealand (RBNZ) left the door wide open for another interest rate cut this year.