(Updates with comment, refreshes prices at 0845 GMT)

By Kevin Buckland and Amanda Cooper

TOKYO/LONDON, July 3 (Reuters) - The yen hit a fresh

38-year trough against the dollar and a record low to the euro

on Wednesday, as the currency continued its downward grind, with

Japanese officials largely remaining on the sidelines amid the

risk of intervention.

The dollar edged lower against a basket of currencies,

extending Tuesday's decline after dovish comments from Federal

Reserve Chair Jerome Powell overshadowed a robust domestic jobs

report.

The euro remained resilient, helped by a stubbornly high

local inflation reading on Tuesday that suggested the European

Central Bank would take its time before cutting interest rates

again. Sterling was steady ahead of Thursday's UK election.

The yen weakened by as much as 0.3% to 161.94 per

dollar for the first time since December 1986. It also hit an

all-time low of 173.80 against the euro.

Japanese authorities have been largely quiet on the yen this

week, with Finance Minister Shunichi Suzuki only commenting on

Tuesday that moves were being watched vigilantly. He refrained

from repeating the oft-used warning that the ministry stood

ready to act.

Atsushi Mimura took over as the ministry of finance's

currency czar on Monday, replacing Masato Kanda, who oversaw the

9.8 trillion yen ($60.67 billion) round of intervention spanning

several days in late April and early May, when the currency

plunged to 160.82 per dollar.

"Right now, the FX market is challenging the Japanese

authorities to do something. You do get the sense that markets

will keep pushing dollar/yen higher until Japan policymakers

respond," said Michelle Metcalfe, head of macro strategy at

State Street Global Advisors.

Some speculated that the Japanese authorities could act

on Thursday, when thin liquidity due to a U.S. holiday would

exacerbate market moves.

Analysts have also pointed to the increased possibility

of a second Donald Trump presidency as having an impact on the

yen, because Trump's policies are seen as likely to lead to

higher U.S. bond yields, which the dollar-yen pair tends to

track.

"A Trump presidency would likely bring higher fiscal

deficits, inflation and yields at the mid- to long-end of the

U.S. rate curve, countering the impact of Fed rate cuts," and

the rising risks of that have moved the goalposts higher for

USD/JPY," said Tony Sycamore, a markets analyst at IG.

The dollar index, which measures the currency against

the euro, sterling, yen and three other major peers, eased 0.1%

to 105.61.

The Fed's Powell said at a European Central Bank conference

in Sintra, Portugal, on Tuesday that the U.S. economy has made

significant progress on inflation, even as he added that more

supportive data is needed to start cutting interest rates.

U.S. data overnight showed job openings had increased in May

after posting outsized declines in the prior two months. The

closely watched monthly payrolls report is due on Friday.

Euro zone inflation eased last month, but a crucial services

component remained stubbornly high, fuelling concerns that

domestic price pressures could stay at elevated levels.

The euro rose 0.15% to $1.0761.

Sterling edged up 0.1% to $1.26995, after rising

0.28% on Tuesday.

The opposition Labour party is widely expected to win in

Thursday's poll, ending 14 years of Conservative government.

Britain's tight finances mean any new government will have

little room to increase spending, potentially removing a

catalyst of sterling weakness and keeping volatility contained.

Elsewhere, the Australian dollar rose 0.2% to

$0.668, helped by better-than-estimated retail sales data, which

kept the risk alive of another Reserve Bank rate hike.

China's yuan slipped to an eight-month trough in offshore

trading amid signs that local authorities are willing to

tolerate the currency's decline. It was also given a nudge by

the lowest reading since October for the Caixin/S&P Global

services purchasing managers' index (PMI).

The yuan finished the onshore session at 7.2734 per dollar,

marking its weakest close since Nov 14, a whisker above the

lower end of the daily trading band at 7.2738.

($1 = 161.5300 yen)