* Dollar set for biggest weekly loss versus yen in over

two months

* Japan likely spent up to $35 billion to support yen

* Central banks held rates steady this week

* ECB and BOJ signal possible hikes in June due to

inflation

(Updates prices throughout, adds analyst comment)

By Chibuike Oguh

NEW YORK, May 1 (Reuters) - The dollar was headed for

its biggest weekly loss against the yen since February on Friday

after Japan was reported to have intervened to support its

currency.

Markets remained on edge after Japan's top currency

diplomat, Atsushi Mimura, said speculative positions were still

evident, underscoring authorities' unease over rapid yen moves.

The dollar briefly slid from around 157.1 to 155.49 against

the yen before recouping some losses after Mimura's

remarks. It was last up 0.26% to 157.04.

"The durability of intervention remains uncertain," said Uto

Shinohara, senior investment strategist at Mesirow Currency

Management in Chicago.

"Historically, its effects tend to fade without accompanying

policy shifts, rate hikes or coordination."

Two sources familiar with the matter told Reuters that

officials had intervened to buy the yen on Thursday after it hit

160.7 per dollar, its weakest since July 2024.

Japan is heading into its Golden Week holiday next week,

with analysts speculating that officials could step in to

support the yen again.

"Given that the authorities conducted FX interventions

during the Golden Week holiday in 2024, and that interventions

in both 2022 and 2024 were carried out on consecutive days, the

risk of additional intervention - even during the holiday

period - remains, if USDJPY rebounds sharply towards 160," said

Barclays analysts led by Shinichiro Kadota.

"Looking at past patterns, consecutive interventions have

not necessarily been triggered only when USDJPY returned to the

previous intervention level; rather, authorities have tended to

step in again when the pair rebounded sharply."

INTERVENTION BILL

Bank of Japan data released on Friday suggested authorities

may have spent up to 5.48 trillion yen ($35 billion) during the

operation, just below the $36.8 billion deployed in July 2024.

The yen has been under sustained pressure from wide

U.S.-Japan interest rate differentials. Its weakness has been

compounded by higher oil prices linked to the Iran war, which

have supported the dollar.

The dollar was on track for its steepest weekly decline

against the yen since early February, down about 1.7%.

INTEREST RATE CALLS

The European Central Bank and the Bank of England held

interest rates steady on Thursday, in line with expectations,

following earlier pauses by the Federal Reserve and the Bank of

Japan.

However, both the ECB and BOJ signalled they could begin

raising rates as soon as June to curb inflationary pressure

stemming from higher imported energy costs.

The euro was flat at $1.1721, heading for a second

consecutive weekly gain. Sterling was last down 0.16% at

$1.135803 and poised to snap four straight weeks of advances

.

The dollar was last down 0.03% to 0.78150 against the Swiss

franc and was set for its second week of losses.

"While markets are pricing roughly a two-thirds chance of a

June hike from the BOJ, expectations for Fed cuts have largely

evaporated," Shinohara said. "That divergence, alongside a more

hawkish Fed, limits the scope for sustained yen appreciation."