Yen still on the backfoot as year-end lull sets in

A one Euro coin is displayed in water in Munich August 20, 2012.

SYDNEY (Reuters) - The yen struggled near multi-month lows against the greenback and euro on Friday, on track to clinch the title of worst major performing currency of 2012 as the last full trading week of the year draws to a close.

The yen stayed under pressure after the Bank of Japan expanded its asset-buying program by an expected 10 trillion yen ($1 trillion) on Thursday and signaled more action ahead including setting a higher inflation target.

The dollar was at 84.36 yen, still within easy reach of a 20-month peak around 84.62 set earlier in the week. The euro traded at 111.78 yen, near a 16-month high of 112.59. So far this year, the dollar has risen some 9 percent on the yen, while the single currency was up more than 12 percent.

Traders expect the yen to remain pinned down, although further significant downside was unlikely given that markets already hold very bearish positions in the currency.

"The Japanese data calendar is heavy over the final week of the year, including November CPI and industrial output. Although soft data could put pressure on the yen, we believe that overextended positioning suggests only limited scope for further downside," said BNP Paribas analyst Vassili Serebriakov.

Traders said talks to avoid the 'fiscal cliff' of government spending cuts and tax hikes in the United States remained a key risk for markets in the closing days of the year.

But investors remained ever hopeful that a deal to avert the fiscal cliff will be struck, and even more confident that the Mayan apocalypse will prove to be just another myth.

All that drama has helped keep the dollar index .DXY from falling below the September trough of 78.601 so far, although it remained precariously close at 79.214.

Despite the euro zone's own debt problems, the euro was on track to end the year some 2 percent higher against the greenback. It was at $1.3251, near an eight-month high around $1.3309 set this week.

Recent positive developments in the euro area included a disbursement of another tranche of long-delayed aid to Greece, and a rise in morale at German businesses that boosted hopes Europe's largest economy will bounce back quickly after a weak end to 2012.

The Australian dollar was also up some 2.5 percent on the greenback this year, despite four separate rate cuts. It was at $1.0482, having peaked at $1.0857 back in February.

(Editing by Wayne Cole)