* Dollar index poised to end week slightly lower
* Greenback on track for weekly gains against yen
By Lisa Twaronite
TOKYO, April 22 (Reuters) - The euro steadied on Friday after a volatile overnight session following the European Central Bank meeting as markets were caught between the ECB's steady stance for now and expectations of further stimulus down the road.
The European currency was on track for a slight weekly gain against its U.S. counterpart, while the dollar index, which tracks the greenback against a basket of six major rivals, was poised for a modest loss. The index was flat in early Asian trade at 94.613 .DXY , down 0.1 percent for the week.
The ECB held policy steady and the euro initially rallied on the view that the central bank would not take additional stimulus measures anytime soon. But it skidded after ECB President Mario Draghi vowed to use all the tools at his disposal for "as long as needed." euro was treading water against the dollar at $1.1291 EUR= after dropping as low as $1.1270 overnight from a more than one-week peak of $1.1399.
"This reversal caught many investors by surprise because the main takeaway from today's meeting is the ECB has no immediate plans to add stimulus nor did they feel that the currency was high enough to renew concerns about its impact on the economy," Kathy Lien, managing director at BK Asset Management in New York, said in a note to clients.
"The ECB is still dovish, they see euro area outlook risks tilted to the downside and expect rates to remain at present or lower levels for an extended period of time," she said.
The dollar was flat against the yen at 109.44 JPY= , but was on track for a weekly gain of 0.6 percent and well off this week's of 107.75 yen plumbed on Monday.
The yen remained pressured by market speculation that the Bank of Japan could take further easing steps as early as its next policy meeting on April 27-28. The Japanese central bank could either expand its asset purchases or cut interest rates even further into negative territory.
Ahead of the BOJ, the Federal Reserve will holds its own policy review on April 26-27. While the Fed is not expected to take any measures, it might use its policy statement to prepare markets for an interest rate hike as early as June.
The dollar was underpinned by rising U.S. Treasury yields, which scaled more than three-week highs overnight as oil prices held near recent highs and reduced demand for safe-haven U.S. bonds. U/S
The yield on benchmark 10-year Treasury notes US10YT=RR stood at 1.866 percent in Asian trade, compared to its U.S. close of 1.870 percent on Thursday.
(Editing by Shri Navaratnam)