* No surprises as Fed says economic progress still needed * Euro weak ahead of ECB’s policy review announcement * Dollar falls vs yen with 10-year Treasury yield at 1.3% TOKYO, July 8 (Reuters) - The dollar traded near its highest in three months versus major peers on Thursday after minutes of the Federal Reserve’s June policy meeting confirmed the world’s biggest central bank is moving toward tapering its asset purchases as soon as this year. The dollar index, which measures the greenback against six rivals, held its ground at 92.702, little changed from Wednesday, when it touched 92.844 for the first time since April 5. Fed officials said substantial further progress on economic recovery “was generally seen as not having yet been met,” although participants expected progress to continue and agreed they must be ready to act if inflation or other risks materialize, according to the minutes of the Federal Open Market Committee (FOMC)’s June policy meeting. “Various participants” at the session still felt conditions for curbing the bond-buying that is supplying markets with cash would be “met somewhat earlier than they had anticipated,” while others saw a less clear signal from incoming data, the minutes showed. “The FOMC remains one of the more hawkish central banks under our coverage,” and will begin to discuss a taper at the policy meeting at the end of this month, Commonwealth Bank of Australia strategist Carol Kong wrote in a client note. “We therefore expect the USD to trade with an upward bias.” The dollar traded at $1.1792 per euro, just off a three-month peak of $1.17815 touched overnight, when German data raised doubts about the strength of Europe’s economic recovery. Investor sentiment in Germany, the euro zone’s biggest economy, fell sharply in July, though it remained at a very high level, the ZEW economic research institute reported. Later Thursday, European Central Bank President Christine Lagarde will hold a press conference after the monetary authority announces the outcome of an 18-month strategy review, which is likely to include a shift in the inflation target to 2% from “below but close to 2%” currently - which would theoretically allow for inflation overshoots. Elsewhere, the dollar traded slightly lower at 110.555 yen , as the pair continued to be weighed down by a slide in U.S. Treasury yields. The benchmark 10-year Treasury note yielded 1.3079% on Thursday in Asia after dipping to 1.2960 overnight for the first time since mid-February. The Australian dollar, widely viewed as a proxy for risk appetite, traded 0.1% weaker at $0.74745, but still near the middle of the broad range in place over the past three weeks. Reserve Bank of Australia Governor Philip Lowe speaks about the labour market and monetary policy later Thursday, a day after the central bank took its first step towards stimulus tapering by announcing that a third round of its quantitative easing program would be smaller in scale than the previous two. Reporting by Kevin Buckland Editing by Shri Navaratnam Our Standards: The Thomson Reuters Trust Principles.