* Profit taking knocks dollar off 7-month peaks
* Bargain hunting prevents further dollar/yen decline for now
* Aussie, kiwi stand tall after overnight rallies
By Shinichi Saoshiro
TOKYO, Nov 20 (Reuters) - The dollar steadied against the yen and euro on Friday after retreating from a recent rally that took the greenback to 7-month highs.
The dollar was firm at 122.915 yen JPY= after sliding 0.6 percent on Thursday, snapping a four-day winning run. The Bank of Japan's decision not to ease monetary policy further weighed mildly on the U.S. currency.
"Foreign players appeared to have cleared out positions before the long Japanese weekend, pushing the dollar lower. Japanese investors, on the other hand, are buying on price dips and preventing a further decline," said Kaneo Ogino, director at foreign exchange research firm Global-info Co in Tokyo.
The euro was steady at $1.0723 EUR= after gaining 0.7 percent overnight.
Traders see the overnight decline in U.S. treasury yields more as a catalyst rather than a sole reason for the dollar's drop, noting the currency appeared ripe for profit taking after surging this week to a 7-month peak against a basket of currencies.
The dollar index stood at 99.076 .DXY , pulling back from a peak of 99.853 hit on Wednesday, its highest since mid-April.
The euro was still on track to lose 0.5 percent on the week after being buffeted by heightened prospects of the Federal Reserve hiking interest rates and the European Central Bank easing monetary policy next month.
Elsewhere, the Australian dollar stood tall after surging overnight on short-covering amid improved global appetite for riskier assets. The Aussie fetched $0.7187 AUD=D4 after rising from Thursday's low of $0.7103.
The New Zealand dollar, another strong performer, was little changed at $0.6559 NZD=D4 after gaining 1.4 percent on Thursday in a rally triggered by upbeat domestic producer prices data. (Editing by Shri Navaratnam)