FOREX-Dollar edges down after failing to gain traction from Yellen

* Yellen refrains from giving clear hint on rate hike timing

* Dollar bulls disappointed, greenback lower vs yen, euro

* Losses light, Fed still seen taking a step to normalising policy

By Shinichi Saoshiro

TOKYO, Feb 25 (Reuters) – The dollar edged down against the yen and euro early on Wednesday after Federal Reserve Chair Janet Yellen held back from giving a clear view on when the Fed may begin raising interest rates.

In closely watched remarks before the U.S. Senate Banking Committee on Tuesday, Yellen avoided the word “patient” in describing the Fed’s approach to raising interest rates.

But she also said any modification of the central bank’s forward guidance should not be read as an indication that it will increase the federal funds rate target range in a couple of meetings.

Though Yellen may have indicated that the Fed was taking another step towards normalising monetary policy, she disappointed dollar bulls who had hoped she would give a more specific time frame to revive prospects for a rate hike as early as mid-year.

Expectations for an early rate hike had been dented by dovish-sounding Fed policy meeting minutes released last week, hurting the dollar.

The dollar index was down 0.1 percent at 94.416 after pulling away from a high of 94.985 struck overnight.

The dollar was down 0.2 percent at 118.71 yen. The greenback climbed to a 12-day high of 119.84 overnight in a knee-jerk reaction to early headlines from Yellen’s testimony, but retraced the gains as the market worked out a more holistic view of her statements.

Despite disappointment some may have felt, the dollar remained firmly within the 118.11-120.48 yen range it has stuck to over the past two weeks.

“Yellen’s latest statements were taken as dovish more or less. But the removal of the word ‘patient’ at the March meeting now looks certain, and that would provide an opportunity to buy the dollar again,” said Daisuke Karakama, market economist at Mizuho Bank in Tokyo.

The euro edged up 0.1 percent to $ 1.1348 after going to a low of $ 1.1288 overnight.

The euro zone’s approval of Greece’s reform plan, a requirement for Athens to receive a four-month loan extension, shored up the common currency.

Aided by the greenback’s broad weakness, the Australian dollar climbed 0.2 percent to $ 0.7845.

(Editing by Eric Meijer)