* Euro breaks key resistance level vs dollar * Euro/sterling surge spills over to euro/dollar pair * Dollar/yen at new post-intervention low (Rewrites, updates prices, adds quote) By Gertrude Chavez-Dreyfuss NEW YORK, Sept 28 (Reuters) - The dollar slumped on Tuesday with prospects growing for additional monetary policy easing as U.S. economic data, including consumer confidence, remained weak. The euro surged to a fresh, five-month high against the greenback, smashing a key resistance level and option barriers on its way up, a signal of further gains in the single euro-zone currency. The yen also firmed, pushing the dollar to below 84 yen, its weakest since Japan intervened in the foreign exchange market two weeks ago to halt its currency's rise. The Federal Reserve is likely preparing a fresh round of quantitative easing measures to announce at the end of its Nov. 2-3 meeting, hedge fund advisor Medley Global Advisors said in a report on Tuesday, a market source told Reuters. [ID:nN28181349] The Fed is also weighing a more open-ended, smaller-scale bond buying program, the Wall Street Journal reported. "The trend is still dollar-negative. Some kind of quantitative easing is probably coming up," said Kaz Shirai, a forex interbank trader at Union Bank of California in Los Angeles. "There's also been talk on Wall Street that $1 trillion may be needed, and that's still a lot of money. That's pushing 10-year yields down, which helps dollar sellers." Shirai also said the resulting recovery in stocks has brought out more risk-takers, with the euro and currencies such as the Australian dollar benefiting. "We're making a new high on the euro," he said, helped by some option-related buying. The euro earlier broke a well-flagged resistance at $1.3511, the 50-percent Fibonacci retracement of its fall from $1.5145 last November to its June low around $1.1876. The euro EUR=EBS rose as high as $1.3577, according to electronic trading platform EBS, taking out barriers at $1.3525. It was last at $1.3575, up 1.0 percent. Gains in the euro accelerated after a weaker-than-expected U.S. consumer confidence reading, its lowest level since February. For details see [ID:nN28177460] According to CitiFX, the next stop in euro/dollar is likely the 55-week moving average which comes in at $1.3630. The bank said there is solid resistance above that level, specifically at $1.3670-$1.3740, where the highs from December 2004, April 2007, and March 2009 converge. Brian Dolan, chief currency strategist at Forex.com in Bedminster, New Jersey, said over the medium term he's looking for a rise in the euro to between $1.38 and $1.39. "There are a few stopping points in between ($1.35 to $1.38) but it could easily happen over the next few days as the euro has gained nearly 5 percent over the last week or so. The euro is the standout here." Analysts said gains in euro/sterling had also helped the euro advance against the dollar. The euro surged against sterling after Bank of England policymaker Adam Posen said the British central bank should start pumping more money into the economy. [ID:nLAC005768]. The euro rose to around 85.76 pence EURGBP=D4 against sterling, up 0.9 percent. Against the yen, the greenback hit a low of 83.81 yen, according to electronic trading platform EBS. The dollar last traded at 83.91 yen JPY=EBS, down 0.4 percent on the day. With dollar/yen trading near the lows, investors are on alert about possible intervention by Japan to stem the yen's strength, although Michael Woolfolk, senior currency strategist at BNY Mellon in New York, said the pair needs to go lower in order for Japanese authorities to step in. "We have not heard enough from (Japan). They are sitting on their hands for the time being, but we will get concerned if (dollar/yen) gets close to 82. They do not want it to go there." (Additional reporting by Steven C. Johnson and Nick Olivari; Editing by Padraic Cassidy)

Source