* Dollar index holds near one-month lows
* BOJ, Fed meetings awaited for fresh incentive
* Aussie nudges up to fresh 8-month high, loonie also supported (Updates prices, adds details and quotes)
By Shinichi Saoshiro and Ian Chua
TOKYO/SYDNEY, March 14 (Reuters) - The dollar steadied against the euro and yen on Monday following last week's large swings, as the market braced for Japanese and U.S. central bank policy meetings that could provide investors with fresh incentive.
The euro was little changed at $1.1156 EUR= , not far from a one-month high of $1.1218 set on Thursday when it soared after the European Central Bank eased extensively but also signalled that it may limit future interest rate cuts.
The dollar was nearly flat at 113.93 yen JPY= having gained 0.6 percent on Friday. An improvement in risk appetite on the back of rising equities and crude oil had lifted the greenback from a low of 112.225 to as high as 114.45 versus the safe-haven yen last week.
The Bank of Japan, fresh from adopting negative interest rates in January, is expected to stand pat when its two-day meeting ends on Tuesday.
The market will still sift through the BOJ's policy statements for any hints that it may be losing confidence in negative rates after the ECB suggested it will have to be cautious on cutting rates ever deeper into negative territory.
"The potential limits of monetary policy will be the market's theme after the ECB, which adopted negative rates before the BOJ, seemingly reverted its focus back to quantitative easing last week," said Shin Kadota, chief Japan FX strategist at Barclays (LON:BARC) in Tokyo.
The BOJ's surprise decision to take rates below zero on Jan. 29 did little to weaken the yen, which eventually soared to a 16-month high against the dollar last month.
Meanwhile, the dollar index wallowed at one-month lows against a basket of major currencies with the Federal Reserve seen almost certain to stand pat at this week's policy review.
Dollar bulls are hoping the central bank will signal an intention to hike more than once this year. Conversely, any hint that the tightening cycle could be drawn out will likely result in a further fall in the dollar, traders said.
"The FOMC statement and members' fed funds rate forecasts will be closely scrutinized. We see risk of USD weakness if the 2017-18 'dots' were to be moved lower," analysts at Barclays wrote in a note to clients, referring to Fed monetary committee participants' "dot plots" of their interest rate expectations.
The dollar index .DXY was steady at 96.186 after shedding 1.2 percent last week.
Sterling was also just shy of a one-month high of $1.4437 GBP=D4 set on Friday.
Commodity-linked currencies stood tall thanks to recent gains in crude oil and overall improvement in global risk sentiment.
The Canadian dollar remained near a four-month high of C$1.3168 per USD CAD=D4 , while the Australian dollar AUD=D4 reached an eight-month high of $0.7584.
Iron ore prices, which rallied last week and helped the Australian dollar's advance, have slid and could weigh on the currency, analysts said. (Editing by Eric Meijer & Shri Navaratnam)