* Yen gains but gains seen capped at 81 and 82 yen
* Euro/dollar dips, off a 2-1/2 month high hit on Friday
Feb 27 (Reuters) - The Japanese yen recovered from a nine-month low against the dollar on Monday as investors decided the greenback's near 6 percent advance against the Japanese currency this month was too far, too fast.
Although most analysts expect dollar/yen to rise further in the long term, some believe the dollar may have limited scope to gain much above 82 yen short term, given the possibility of more monetary easing by the U.S. Federal Reserve.
The dollar's rise against the yen has tracked a widening spread between short-term U.S. and Japanese yields after unexpected monetary easing in Japan earlier this month, coupled with data showing signs of an improving U.S. economy.
The euro eased against the dollar but stayed near recent highs before an expected liquidity injection by the European Central Bank.
"Some retracement is expected, given that dollar/yen has rallied nearly 6.0 percent in the month of February, driven by a combination of factors that include central bank policy and weakened economic data," said Eric Theoret, currency strategist at Scotiabank in Toronto.
The dollar rose as high as 81.61 yen in early global trade, according to Reuters data, before surrendering gains. It was last down 0.5 percent at 80.51 but that still leaves the dollar with a 5.7 percent gain for the month against the yen.
An options barrier is reported at 82.00 yen, though analysts said short-term resistance is now at 81.00 yen, given it has broken through that level for two straight days but so far has failed to hold it at the close.
Still, Commonwealth Bank of Australia raised its dollar/yen forecasts to 90 yen by the end of September and 92 yen by year-end on the expectation that Japan's terms of trade will deteriorate in the coming months.
But many are sceptical the recent move marks the start of a long-term uptrend in dollar/yen.
"For dollar/yen to trade higher you need to see interest rates in the U.S. and other countries outside of Japan move higher. This would be the trigger for long-term weakness, but it is not the case yet," said Richard Falkenhall, currency strategist at SEB in Stockholm.
Later this week, U.S. Fed Chairman Ben Bernanke may hint at the possibility of another round of bond-buying when he speaks in Congressional testimonies.
The euro climbed to 109.89 yen, according to Reuters data, the highest since Oct. 31, before sliding off highs to trade at 107.84, down 1 percent.
ECB CHEAP FUNDING
The euro was down 0.5 percent at $1.3392. The euro may be influenced by a reported options expiry on Monday at $1.3400.
The euro stayed not far from a 2-1/2 month high of $1.3486 set on Friday, with more gains possible before the ECB's second offering of unlimited 3-year loans to banks in a longer term refinancing operation (LTRO) on Wednesday.
"At least for now, a large ECB LTRO (funding operation) could be positive for the euro as the market will focus on the positives and it will increase risk appetite," SEB's Falkenhall said.
A Reuters poll of economists showed banks will take 492 billion euros, close to the 489 billion borrowed in the first deal just before Christmas.
Gavin Friend, currency strategist at nabCapital, expects the euro to rise toward $1.37/$1.38 over the next couple of weeks due to the LTRO auction, optimism that the Greek debt problems will be stabilized and better global economic data.
However, the euro may struggle longer term as concerns grow that the ECB's cheap funds are a form of quantitative easing. Hurdles also remain after finance ministers agreed to a second bailout for Greece earlier this month.
Leading G20 economies told Europe over the weekend it must put up extra money to fight its debt crisis, piling pressure on Germany to drop its opposition to a bigger European bailout fund.
Scotia Capital has changed its year-end euro/dollar forecast of $1.25.
The Australian dollar was down 0.1 percent at $1.0683. Australian Prime Minister Julia Gillard convincingly won a leadership vote against rival Kevin Rudd on Monday, just as opinion polls showed her unpopular minority government clawing back voter support despite the bitter fight to head the party..