* Yen jumps after Japanese official says it has weakened enough
* Other major currencies subdued ahead of key events this week
* BOJ meeting, Bernanke's Congressional testimony in focus
* Dollar index off near-3-yr high
By Sophie Knight and Ian Chua
TOKYO/SYDNEY, May 20 (Reuters) - The yen reversed from a 4-1/2-year low against the dollar on Monday after Japan's economy minister suggested the government might be satisfied with its current level, following a sharp decline over the past six months.
The dollar dropped 0.6 percent to 102.65, having slid about 1 percent to 102.00. The euro lost 0.6 percent to 131.87 after plumbing 131.05. Support is seen around 131.10, with resistance above 132.55.
Just last Friday, the dollar reached a 4-1/2-year high of 103.32, while the euro hovered near a 3-1/2-year peak of 132.78.
The turnaround came after Japan's economy minister, Akira Amari, said the yen's excessive strength has largely corrected and further weakness in the currency could damage Japan's economy.
"I think the reaction we saw this morning was a bit overdone," said Bart Wakabayashi, head of forex at State Street Global Markets, adding that typically thin trade in Asia's early morning exacerbated the reversal.
"There was a big disappointment at the weekend with Bernanke not really saying anything at all, so markets were looking for some instigator of volatility. They found that in Amari."
U.S. Federal Reserve Chairman Ben Bernanke made no reference to monetary policy or the immediate outlook for the U.S. economy in prepared remarks to graduates of Bard College at Simon's Rock, Massachusetts, at the weekend.
However, Wakabayashi said that concerns about a weak yen are warranted, given the rising import and energy costs for resource-poor Japan.
Ten percent of that slide came after the Bank of Japan unleashed the world's most intense burst of stimulus last month, promising to inject $1.4 trillion into the economy in less than two years to meet its pledge of achieving 2 percent inflation in roughly two years.
At its May 21-22 policy meeting, the BOJ is expected to hold off on easing policy further, but may fine-tune its market operations to stem recent volatility in the bond market.
In contrast, expectations are rising that the the Federal Reserve will wind down its Quantitative Easing (QE) programme some time this year, after a flurry of upbeat U.S. data in the past few weeks has shown an improving economic landscape.
Against a basket of currencies, the dollar slipped 0.2 percent to 84.093, retreating from Friday's high of 84.371, its highest level since July 2010.
Data out on Friday showed currency speculators had increased their bets in favour of the U.S. dollar to the highest in 11 months in the week ended May 14.
However, dollar bulls will be keeping a close eye on Bernanke's testimony to Congress later in the week, given that he has showed no signs of wanting to taper the Fed's bond-buying, or QE programme any time soon.
"We expect Bernanke to reiterate the Fed's commitment to an accommodative policy stance, while sticking to the latest policy statement in terms of cost and benefit of further QE, that it is prepared to increase or decrease the size of purchases as the economy evolves," analysts at Barclays Capital wrote in a client note.
The euro was steady against the dollar, buying $1.2836 , hanging near a one-month low of $1.2796 reached on Friday. The European Central Bank has said that it could consider cutting deposit rates to below zero if economic conditions worsen.
The Antipodean currencies clawed back ground on Monday after the dollar's broad strength forced them to take a back seat the previous week.
The Australian dollar gained 0.5 percent to $0.9771 after plunging to an 11-month low of $0.9711 on Friday, marking a nearly 6 percent slide so far this month. Against the yen , it has only chalked up a 3.2 percent gain since the BOJ announced its audacious easing plan.
The Aussie lost some of its shine after an unexpected rate cut from the central bank, which sharpened the spotlight on a lacklustre recovery in Chinese demand for natural resources.
"The Aussie is a lot easier to sell off than the Kiwi because of its more obvious correlation with China's economy," said Yoshio Takahashi, currency strategist at Barclays (LSE: BARC.L - news) in Tokyo.
"At the moment it is the weakest of the three commodity currencies, with the Canadian dollar in top place."
On Monday, the New Zealand dollar gained 0.8 percent to $0.8109. It has dropped 5.1 percent this month so far. The Canadian dollar, which has gained 3.6 percent this year, dropped 0.1 percent to $1.0277 on Monday.