TOKYO (AFX-ASIA) - The dollar was lower against the yen in midmorning trade, hit by renewed uncertainty over the trend for US interest rates following the overnight congressional testimony by Federal Reserve chairman Alan Greenspan, dealers said. Greenspan told the Joint Economic Committee that the strength of the current economic expansion is still uncertain and low inflation means the Fed can wait before hiking interest rates. On the other hand, Greenspan said the Japanese economy is beginning to show signs of stabilisation as a result of the fact that the US and Europe "are beginning to firm". The dollar was also pressured by fears of further conflict in the Middle East following the failure of US Secretary of State Colin Powell's peace mission to secure a ceasefire, dealers said. "It seems that it may now be better if we prepare for an enlarged downside risk for the dollar," UFJ Trust and Banking Co Ltd customer sales trader Issaku Taguchi said. "There is also the view that (Japanese) fund managers are seeking to shift fund allocation back to domestic assets from foreign assets." However, the dollar's falls have been limited so far due to speculation that large-scale buy orders for the US unit will emerge at around the 130.50 yen level and on concerns over possible verbal intervention by the Japanese authority, dealers said. Japanese finance minister Masarujo Shiokawa has recently signalled that Japan is determined to prevent the appreciation of the yen beyond the 130/dollar level. "But, few think the authority will actually intervene the market at such a level. So, this level is not likely to stand as an invincible downside support for the dollar," UFJ's Taguchi said. "If such a level is broken, the dollar may be pushed to its recent low level (of below 127 yen)." The euro was firmer due to growing negative sentiment towards the dollar amid receding expectations for an early rate hike in the US, dealers said. "The euro is not likely to reach the 0.90 usd level immediately, but given the likely increase in interest rate-driven play, its downside is likely to be gradually lifted up further," Taguchi said.