SYDNEY, Sept 20 Reuters The yen pared its losses on Friday as the Bank of Japan BOJ sounded optimistic about growth and signalled it will be judicious about further policy tightening, while the dollar had its own problems as markets priced in more rapid U.S. rate cuts.

It has been a tough week for the yen, with the euro gaining 2.2 to 159.46 as speculators booked profit on recent long yen positions.

The euro also firmed to 1.11635 , up 0.9 for the week and within striking distance of the August peak of 1.1201. A break there would target a July 2023 top of 1.1275.

The dollar fell 0.3 to 142.21 yen , well off an overnight high of 143.95, as the BOJ did as widely expected, keeping unchanged its overnight call rate target at 0.25 by a unanimous vote.

It maintained its view the economy remained on track for a moderate recovery, but said inflation was moderating and on target, leaving investors a little less reluctant to sell the yen. It also highlighted currency volatility as a factor in its thinking.

The BOJ39;s policy statements can sometimes be rather opaque, so investors will be focused on any hints from Governor Kazuo Ueda on the timing and pace of tightening at his postmeeting news conference.

Governor Ueda is expected to be cautious yet gradually hawkish, Shoki Omori, chief Japan desk strategist at Mizuho Securities, said. Depending on the degree of this tone, if the hawkish stance is clearly conveyed to the market, dollaryen exchange rate is expected to trend…