* Dollar has been buoyed as cautious investors close shorts * Currency market volatility wallows at 16-month low * Traders watching for clues on timing of Fed tapering By Kevin Buckland TOKYO, June 15 (Reuters) – The dollar hovered below a one-month high compared with major peers on Tuesday ahead of a much-anticipated Federal Reserve meeting that could signal a change in the outlook for U.S. monetary policy. The U.S. currency has been buoyed as traders closed short positions before the Fed’s two-day policy-setting confab, which kicks off on Tuesday. The dollar index, which measures the greenback against a basket of six currencies, was flat early in Asia at 90.517.
