* Dollar seen under pressure if Fed decision disappoints
* Japanese importers' bids help lift dollar
* Aussie hits 29-year peak on rising commodity prices (Updates prices, adds quotes, graphic, changes byline, dateline, previous TOKYO)
By Julie Haviv
New York, April 25 (Reuters) - The dollar fell further against the euro on Monday and could test its all-time low against a basket of currencies this week if the U.S. Federal Reserve shows no sign of changing its easy monetary policy.
With many markets closed for Easter and no major U.S. economic reports on the calendar, the April 26-27 Federal Open Market Committee meeting will be the key event risk this week as traders try to gauge the direction of U.S. policy.
Market participants will look to the post-meeting news conference by Fed Chairman Ben Bernanke on Wednesday -- the first regularly scheduled news briefing by a Fed chief in the U.S. central bank's 97-year history -- to see how the Fed plans to exit from its ultra-loose policy.
"The bond and currency market reaction is still an unknown and a significant risk," said Camilla Sutton, chief currency strategist at Scotia Capital in Toronto.
The dollar index, which measures the currency's value against six major currencies, traded flat at 73.972 <.DXY> but many trader says it could test a three-year low of 73.735 hit last week. A break of that could open the way for a test of the record low of 70.698 hit in 2008.
Nevertheless, currency speculators pared bets against the U.S. dollar for a fourth straight week, according to data from the Commodity Futures Trading Commission released Friday. For details click on [ID:nN25194222].
The Fed is expected to confirm its $600 billion asset purchase program known as QE2 will end as scheduled in June. The program is a bane for the dollar since it is tantamount to printing money, so an indication that it may end it earlier would be a positive for the beaten-down currency.
Once QE2 concludes there will be some upward pressure on yields; however, with U.S. monetary policy still notably weak, an extended dollar rally is not likely, Sutton said.
"This is the medium-term risk; the near-term risk lies in the wording of the statement, any shift in tone, the press conference itself and the FOMC's updated set of forecasts," she said.
In early morning New York trade the euro
With interest rate differentials a prime driver of currencies, the dollar will also benefit if the Fed turns more hawkish in light of growing inflationary pressures.
If Bernanke indicates that the Fed's accommodative policy may continue for the foreseeable future, the dollar will likely see selling pushing the EUR/USD towards the key $1.5000 figure, strategists said.
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The Australian dollar, meanwhile, rose to a fresh 29-year high of $1.0777
Gold hit a lifetime high
A combination of upbeat global growth, signs of weaker U.S. growth and the prospect of dovish Fed policy is expected to support fund flows to higher-yielding currencies such as the euro and the Australian dollar from the U.S. unit, traders said.
"I doubt there's much dollar carry trade out there but when market players are eager to take risk, they tend to look to interest rate gaps on speculation that the dollar could be used as a funding currency," said Kimihiko Tomita, the head of foreign exchange at State Street Capital Markets.
Against the yen, the dollar ticked up 0.1 percent to about 81.92 yen
USDJPY has weakened from roughly 85.50 since early April with recent support seen just below 82, Scotia's Sutton said.
Some analysts say worries about rising U.S. debt and political bickering in Washington over how to tackle the budget deficit are also undermining the dollar, making it easier for speculators to sell the currency, although there is no evidence that foreign investors are dumping U.S. assets. (Additional reporting by Gertrude Chavez Dreyfuss in New York and Hideyuki Sano in Tokyo; Editing by James Dalgleish)