* Dollar bulls cut long positions after nonfarm payrolls

* U.S. wage fall offsets brisk job growth

* Aussie rises to near one-month high vs USD

* Trade slow with Japan closed for public holiday

By Ian Chua

SYDNEY, Jan 12 (Reuters) – The greenback eased slightly in Asia on Monday as dollar bulls struggled to get over their disappointment at a U.S. payrolls report that showed an unexpected fall in wages.

A holiday in Japan combined with a dearth of market-moving economic news in the region ensured the dollar made no big moves.

The dollar struck a one-week low of 118.12 yen, but by late morning in Asia it had steadied to 118.26, to stand just 0.2 percent weaker than levels seen in late U.S. trading on Friday.

The euro firmed to $ 1.1860, pulling away from a nine-year trough of $ 1.1754 plumbed on Thursday.

Stretched dollar long positions were shaken on Friday after data showed U.S. wages posted their biggest decline in at least eight years in December, casting some doubt over the likely timing of an expected increase in U.S. interest rates this year, even though payrolls increased by a brisk 252,000.

“This outcome will fuel the debate on whether the Fed will trust the usual relationship between falling unemployment and rising wages to eventually bear fruit, or sit on its hands until it sees some real wage pressures,” said Raiko Shareef, currency strategist at BNZ.

The dollar index was a touch softer at 91.785, off a nine-year peak of 92.528 scaled last week.

Yet, many economists at Wall Street’s biggest banks remained convinced the Federal Reserve will raise interest rates by June.

In contrast, the overwhelming sense is that the European Central Bank will soon be forced to take even bolder stimulus measures.

Italy’s central bank chief warned on Sunday the risk of deflation in the euro zone should not be underestimated. He said the best way to deal with the problem is to buy government bonds.

Traders said its only a matter of time before the market adds fresh bearish positions in the euro.

The standout currency on Monday was the Australian dollar, which climbed to a near one-month high of $ 0.8249 as buying momentum persisted following Friday’s 1-percent rally.

“We’ve had a round of short covering which has helped elevate the Aussie,” said Sue Trinh, senior currency strategist at RBC.

However, traders said a negative backdrop of falling oil and metal prices means the risk for the Aussie remained on the downside.

(Editing by Simon Cameron-Moore)