* Dollar hits two-week low vs yen
* Euro hits 15-week high vs dollar
* Traders grow skeptical of 2016 Fed rate hikes
* U.S. January non-farm payrolls report eyed (Adds analyst comment, data, U.S. non-farm payrolls expectations; updates prices)
By Sam Forgione
NEW YORK, Feb 4 (Reuters) - The U.S. dollar extended its plunge against major currencies on Thursday as traders sharply unwound bullish bets against the greenback on continued skepticism that the Federal Reserve would be able to hike interest rates this year.
The euro hit its highest level in 15 weeks of $1.12390 against the dollar, while the dollar fell to a two-week low against the yen of 116.655 yen.
The dollar index, which measures the greenback against a basket of six major currencies, hit a roughly 15-week low of 96.259 .DXY .
Against the Swiss franc, the dollar dropped to a 3-1/2-week low of 0.99250 franc CHF=EBS .
"The market came into 2016 with a strong preference for the dollar against virtually all other currencies," said Shahab Jalinoos, global head of FX strategy at Credit Suisse (VX:CSGN) in New York. "That idea has been really challenged."
Many market participants entered the year with expectations that divergence in monetary policy between a tightening Fed and stimulative European Central Bank and Bank of Japan would lead the dollar higher. In December, Fed policymakers had projected four rate hikes this year.
Analysts have said dovish comments from New York Fed President William Dudley to MNI on Wednesday and recent weak U.S. economic data have cast more doubt on the likelihood of a swift pace of Fed rate increases this year. The dollar index posted its biggest one-day decline in two months on Wednesday.
Speculators had cut bullish bets on the U.S. dollar in recent weeks on reduced Fed rate hike expectations. The value of the dollar's net long position was at $23.85 billion in the week ended Jan. 26, marking the fifth straight weekly decline according to Reuters calculations and data from the Commodity Futures Trading Commission.
Fed fund futures contracts on Thursday suggested traders were pricing in just a 10 percent probability of a Fed rate hike next month and a 34 percent chance by the end of the year, according to CME FedWatch.
U.S. economic data, including figures showing new orders for U.S. factory goods fell in December by the most in a year, reinforced notions that the Fed would need to delay further rate hikes.
Investors awaited Friday's January U.S. non-farm payrolls report.
"For those people who are skeptical of any additional Fed tightening this year, a soft labor market report would reinforce (that view)," said Kathy Lien, managing director at BK Asset Management in New York.