* Euro stays near recent high on hopes of ECB tapering hint
* Speculators' euro long position biggest since 2011
* Dollar bruised by soft U.S. inflation, political gloom
By Hideyuki Sano
TOKYO, July 20 (Reuters) - The euro held near a 14-month high against the dollar on Thursday as investors look to hints from the European Central Bank on tapering of its stimulus, while the yen braced for news from the Bank of Japan's policy meeting.
The ECB is expected to lay the groundwork for an autumn policy shift when it meets on Thursday, emphasising improved growth while trying to temper expectations after previously setting off a mini-tantrum in financial markets.
ECB President Mario Draghi opened the door to policy tweaks in a speech in Sintra, Portugal, in late June, leading to expectations that the ECB is ready to announce cuts in its asset purchasing programme.
The euro is now at $1.15275, backing off a tad from Tuesday's $1.1583, its highest level since May 2016 but still maintaining gains of more than 3 percent since Draghi's Sintra speech.
While most market players expect an announcement of tapering from the ECB's next meeting in September, a move this week is not completely ruled out.
Some market participants, though, said there was a chance the euro would hit suffer a setback given investors have already built up massive positions in the currency.
Data from U.S. financial watchdog published on Friday showed speculators last week held the largest net long position in Chicago euro/dollar futures in six years - calling attention to risks in such positions being unwound.
On the other hand, Chicago futures speculators at the same time had sold the yen believing that the Bank of Japan will stick to its loose monetary policy at Thursday's monetary meeting, with their net short position at two-year highs.
"This suggests speculators' core positions are euro-long, yen-short. There is a chance those positions will be wound back after the ECB if markets think the ECB was less hawkish than expected," said Makoto Noji, senior strategist at SMBC Nikko Securities.
The euro was flat at 128.915 yen, off the 17-month peak of 130.76 touched last week.
The Bank of Japan is widely expected to keep its policy on hold at its policy meeting ending later in the day, putting it on a different path from a some other major central banks that are looking to dial back many years of massive easing.
Yet the yen has been strengthening against the dollar in recent weeks, because of the dollar's broad weakness.
Soft U.S. inflation in recent months is raising speculation that the Federal Reserve may not have justification to raise interest rates one more time this year as Fed policymakers have suggested.