* Investors cover shorts on euro, helped by German stance
* Japan PM Noda open to dissolving parliament on Friday
* Analysts expect more pressure on BOJ to ease policy
* Fed minutes due later on Wednesday
By Gertrude Chavez-Dreyfuss
NEW YORK, Nov 14 The euro traded higher against the dollar on Wednesday, after five straight losing sessions, benefiting from signs Germany was willing to see a resolution of Greece's debt crisis.
The yen, on the other hand, fell sharply against the dollar and euro after Japanese Prime Minister Yoshihiko Noda said he was ready to dissolve the lower house of parliament later this week and hold a snap election next month.
The euro had pared its recent losses in the previous session, buoyed on expectations that debt-laden Greece may receive aid worth roughly 44 billion euros ($55.93 billion) at one go. This was Germany's proposal which was discussed at a meeting of European Union finance leaders on Tuesday.
"We're seeing some follow-through buying of the euro after Germany made the proposal on giving Greece one single tranche. But there is still a lot of uncertainty so I don't know if we can sustain the euro's gains," said Brian Kim, currency strategist at RBS Securities in Stamford, Connecticut.
For Greece to receive financial aid, international lenders must reach a broader agreement on the sustainability of Greece's debt, which is likely to check the euro's gains.
The yen, meanwhile, was the biggest mover of the day, notching losses of more than 1 percent against the dollar and euro as hedge funds and long-term investors sold the Japanese currency.
The main opposition Liberal Democratic Party (LDP), which favors further monetary policy easing by the Bank of Japan, leads in opinion polls and the prospect of an early election is regarded as negative for the yen.
LDP leader Shinzo Abe called on the central bank on Wednesday to print "unlimited yen" to achieve a new inflation target.
Japanese PM Noda also told parliament he would be willing to dissolve the lower house on Nov. 16 and hold elections in December if the opposition agreed to pass reforms to the electoral system. A senior lawmaker from his ruling Democratic party said an election was likely to be held on Dec. 16.
Against the yen, the dollar rose 1.2 percent to 80.28 yen and the euro climbed 1.5 percent to 102.29 yen.
The euro also rose 0.3 percent against the dollar to 1.2741 .
The euro zone's single currency pared gains after weak economic U.S. data, denting the market's appetite for some of higher-risk currencies.
U.S. retail sales fell in October, while producer prices unexpectedly weakened last month.
"This morning's economic reports paint of picture of a slow and struggling U.S. recovery that will require continued stimulus from the Federal Reserve," said Kathy Lien, managing director of FX strategy at BK Asset Management in New York.
THE FED AND THE DOLLAR
The yen aside, the dollar eased against most major currencies, including the Swiss franc, on growing signs that the Federal Reserve is likely to adopt an ultra-loose monetary stance in coming months.
The Fed's influential Vice Chair Janet Yellen said on Tuesday U.S. interest rates may need to stay near zero until early 2016 to forcefully boost employment.
The minutes from the latest Federal Open Market Committee meeting will be released later on Wednesday and are likely to confirm an easy policy bias for some time to come, a factor which could limit the dollar's recent gains.
The dollar index ticked slightly lower on the day to 81.040, having hit a two-month high of 81.241 on Tuesday.
Sterling hit a two-month low against the dollar of $1.5855 after the Bank of England's inflation report painted a gloomy outlook for the UK economy and governor Mervyn King said quantitative easing could still be restarted.
The pound was last little changed at $1.5876.
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