* Yen rises to nearly three-week high against dollar
* Fed QE tapering viewed as less imminent - strategist
* Aussie slips against dollar
By Lisa Twaronite
TOKYO, May 30 (Reuters) - The dollar remained under pressure in early Asian trading on Thursday, after tumbling more than one percent against the yen in the previous session, on growing expectations that the U.S. Federal Reserve will maintain its stimulus for the time being.
The dollar fell 0.2 percent to 100.900 yen after sinking as low as 100.585 yen on the EBS trading platform, its lowest level since May 10 and well below a 4-1/2 year high of 103.73 yen set on May 22.
“This is related to the decline in Treasury yields,” said Andrew Wilkinson, chief economic strategist at Miller Tabak & Co in New York.
Benchmark U.S. 10-year Treasury yields eased to 2.12 percent on Wednesday, having reached a 13-month high of 2.24 percent earlier in the session on expectations that the U.S. central bank will curb its quantitative easing.
Federal Reserve Chairman Ben Bernanke told a congressional panel last week that a decision on whether to scale back the Fed’s current monthly pace of $85 billion in asset purchases could come at one of the central bank’s “next few meetings” depending on economic data.
“Some of the move is because people are realizing the Fed isn’t going to taper quickly, and that’s probably weighing on the dollar,” Wilkinson said.
“Investors are starting to question the reality of imminent tapering.”
But most strategists expect rising expectations of QE tapering to lift Treasury yields and bolster the greenback in the months ahead. Societe Generale expects the U.S. benchmark yield to rise to 2.75 percent by the end of the year, from its current level of around 2.12 percent.
A widening spread between U.S. and Japanese yields would add to pressure on the yen, although Japanese government bond yields have been in a rising trend as the Bank of Japan has vowed to aim for a two percent inflation target.
Some market participants had expected the BOJ’s easing would pressure JGB yields and send Japanese investors in search of higher yields abroad. But finance ministry data on Thursday showed they sold 1.117 trillion yen ($11.1 billion) worth of foreign bonds last week, the second straight week of net selling, as they resumed repatriating overseas investments.
The dollar index also dropped on Thursday, shedding 0.1 percent to 83.594, pulling away from a 3-year high of 84.498 hit a week ago.
The euro was steady at $1.2944 with May 22’s one-week high of $1.2998 seen as its next target.
A bigger-than-expected rise in German inflation bolstered the euro, though growing expectations for more monetary easing by the European Central Bank continued to pressure it.
The Australian dollar, which skidded in the previous session to a nearly two-year low of $0.9528, was down 0.1 percent at $0.9623