* Euro hits 11-mth high above 120 yen
* Dudley's dovish comments take shine off dollar
* Aussie rises to fresh 29-year high at $1.0422
By Natsuko Waki
TOKYO, April 5 (Reuters) - The euro held below this week's five-month high against the dollar and 11-month peak versus the yen on Tuesday as investors paused to assess how much it can make in fresh gains given that expectations for interest rate rises have largely been priced in.
The European Central Bank is expected to raise interest rates by a quarter point from a record low of 1 percent at its meeting on Thursday to rein in inflationary pressures, with two more 25 basis point hikes priced in by the year-end .
But the single currency has already risen more than six percent against the dollar and over 10 percent versus the yen this year, making investors reluctant to buy more ahead of Thursday's meeting.
Uncertainty over Federal Reserve policy also prompted investors to stay on the sidelines ahead of the release of the minutes of its March 15 meeting.
"For the ECB, an April interest rate hike is a done deal and one or two more hikes are priced in. It's hard to see a positive surprise from here," said Masafumi Yamamoto, chief FX strategist at Barclays Bank.
"Still, the euro zone would be the first to raise interest rates, which supports the euro. Expectations for diversification flows from higher oil prices are also positive. There is also a risk that the Fed minutes may show a hawkish tone."
The euro stood at $1.4228 , having risen to a high around $1.4268 on Monday. A rise above resistance at $1.4281, the November high, would open the way to $1.4450. Support is seen at $1.4190, with traders citing stops through to below $1.4150.
Traders also noted trendline resistance drawn from the euro's record high set in July 2008 coming in around $1.4300.
The euro was up around 0.2 percent at 119.76 yen , close to its 11-month peak above 120.05 hit on Monday.
The dollar ticked higher to 84.19 yen , edging closer to a six-month peak of 84.72 set on Friday before stalling ahead of option barriers at 84.75. A 200-day moving average at around 83.55 is now seen acting as support.
FED POLICY
Investors are focusing on the Fed minutes to give more clues on the future direction of monetary policy after policymakers suggested on Monday the Fed is likely to keep its $600 billion asset purchase programme until June.
On Monday, Atlanta Fed President Dennis Lockhart said U.S. inflation was likely to remain moderate and St. Louis Fed Research Director Christopher Waller said the Fed was likely to buy all the bonds it has said it would purchase by June 30. [ID:nN04277975]
Charles Evans, president of the Chicago Federal Reserve Bank, told CNBC on Monday the Fed's programme is most likely an "adequate" size. [ID:nWEN0460]
"It is becoming increasingly evident (there is) a divergence in opinions among Fed members. These different opinions among Fed members may seep into the FOMC minutes later today," BNP Paribas said in a note to clients.
"This may be interpreted as hawkish, but we expect the Fed to stand pat especially since we expect incoming data through Q2 to be on the weaker side."
The Bank of Japan is likely to downgrade its economic assessment and keep policy ultra-loose on Wednesday, a factor that is keeping the yen under pressure. (Reporting by Natsuko Waki; Editing by Joseph Radford)