* Two Fed officials advocate U.S. rate hike in H1
* Dollar index extends rebound from five-month trough
* Aussie rises after RBA Governor's upbeat comments
By Hideyuki Sano and Ian Chua
TOKYO/SYDNEY, March 22 (Reuters) - The dollar held firm on Tuesday, retaining its rebound from a five-month low as two Federal Reserve officials supported the an interest rate hike in coming months while the Australian dollar gained on comments from that country's central bank chief.
The dollar index .DXY last traded at 95.277, pulling further away from a five-month trough of 94.578 set on Friday.
Atlanta Fed President Dennis Lockhart said there was sufficient economic momentum to justify a further rate hike "possibly as early as the meeting scheduled for end of April". Francisco Federal Reserve Bank President John Williams told Market News International that April or June would be "potential times for a rate hike". comments came a week after the Fed kept rates unchanged and cut in half the number of projected hikes to a mere two this year - a move seen by many as dovish.
While dollar bulls were heartened by the latest comments, the reaction in fed funds futures 0#FF: was muted as some investors held back ahead of speeches by more dovish Fed officials including Chicago Fed President Charles Evans.
Against the yen, the greenback popped back above 112.10 yen JPY= , recovering from a 16-1/2 month trough of 110.67 plumbed last week.
In a sign that market players are reducing wariness about the dollar's further fall beyond the low, implied volatilities on the dollar/yen options are falling, with three-month volatility JPY3MO= flirting with a six-week low around 9.5 percent.
"There are people out there who had thought the dollar could fall below 110 yen and are now being forced to cover their short positions," said Masatoshi Omata, senior client manager of market trading at Resona Bank.
The euro was stabilising at $1.1258 EUR= , after having recoiled from Thursday's one-month high of $1.1342.
The Australian dollar gained 0.5 percent to $0.7620 AUD=D4 , helped by upbeat comments on the economy from Reserve Bank of Australia (RBA) Governor Glenn Stevens. also said the recent rise of the Australian dollar was "getting a bit ahead of itself" but markets showed a muted response. Australian dollar has been on a tear, putting on nearly 6 U.S. cents in a few short weeks to reach an 8-1/2 month high of $0.7681 on Friday.
(Editing by Kim Coghill and Richard Borsuk)