* Boehner's uncompromising comments raise U.S. debt default fears * Dollar index stuck close to eight-month low * Safe-haven yen rallies to near two-month high vs dollar By Wanfeng Zhou NEW YORK, Oct 7 (Reuters) - The dollar fell on Monday, remaining near an eight-month low against a basket of currencies, as the U.S. budget deadlock in Congress showed no sign of breaking. Investors flocked to perceived safe havens like the yen and the Swiss franc, driving the dollar to it weakest since mid-August against the Japanese currency. As the U.S. government neared the second week of a shutdown and an Oct. 17 deadline to increase the nation's borrowing limit approaches, neither Republicans nor Democrats offered any sign of impending agreement on either the shutdown or the debt ceiling. Both blamed the other side for the impasse. Fears have grown that a prolonged stalemate could hurt the fragile economic recovery and could compel the Federal Reserve to delay trimming its bond purchases, which are dollar-negative. "The Japanese yen may continue to appreciate against its U.S. counterpart as the fiscal drag pushes the FOMC to delay its exit strategy," said David Song, currency analyst at DailyFX in New York. "As a budget deal fails to surface, the deadlock in Congress may encourage the Fed to retain its current policy throughout the remainder of the year, and the dollar remains at risk of seeing further weakness over the near-term." The dollar index fell 0.2 percent to 79.952, not far from an eight-month low of 79.627 hit on Thursday. The dollar fell to as low as 96.79 yen, its lowest since Aug. 12, before recovering to 96.90 yen, down 0.6 percent on the day. Traders cited support at 96.67 yen, its 200-day simple moving average. Reported large option expiries at 96.50 yen and 96.75 yen could keep the pair close to its current levels. The dollar was also just in oversold territory against the dollar with a 14-day exponential relative strength index reading of 28.541. Osamu Takashima, chief FX strategist at Citigroup Global Market Japan in Tokyo, said there was a risk of the pair falling further. "If the dollar falls to around 95 yen, under-hedged Japanese exporters may try to sell the dollar, further accelerating the dollar's fall." The dollar fell 0.4 percent to 0.9038 Swiss franc, slipping toward Thursday's low of 0.8965, the lowest since late February 2012. The euro rose 0.1 percent to $1.3577, not far from Thursday's eight-month high of $1.3645. The euro's rise was much of the reason for the decline in the dollar index. Some analysts said the dollar's losses have been limited so far as investors still hope that politicians will find a last-minute resolution to avert a disastrous debt default. The last big confrontation over the debt ceiling, in August 2011, ended with an eleventh-hour agreement under pressure from shaken markets and warnings of an economic catastrophe if a default were allowed to occur. A similar, last-minute resolution remained a distinct possibility this time, as well. The dollar's status as a safe haven has also been undermined by expectations that any damage done to the U.S. economy would be countered by the Fed sticking to its stimulus. Jane Foley, senior currency strategist at Rabobank in London, said, "there is some opinion in the market that the dollar's status as a safe haven will eventually win the day." During past debt ceiling negotiations, the dollar had stayed directionless and managed a relief rally once compromises had been made, she said. "Near term, we expect the dollar index to retain a downside bias based mainly on the perception that the Fed could decide that delaying tapering (of quantitative easing) is necessary to protect the economy from any negative fallout from the impasse."