* DXY plumbs one-month lows as market cuts long USD positions
* ISM shows contraction in factory activity
* Aussie dollar eyes interest rate decision due 0430 GMT
By Ian Chua
SYDNEY, June 4 (Reuters) - The U.S. dollar wallowed at one-month lows against a basket of major currencies on Tuesday, suffering a vicious setback after disappointing data curbed speculation the Federal Reserve would scale back its stimulus anytime soon.
The dollar index slid as much as 1 percent to 82.428 after the Institute for Supply Management (ISM) said its index of national factory activity fell to 49.0, from 50.7, its lowest since June 2009. It last stood at 82.709.
"We think USD long positions are likely to remain under pressure heading into Friday's jobs report, and the employment number will likely need to beat the 165,000 consensus significantly to revive USD upside momentum," said Daniel Katzive, strategist at BNP Paribas.
While the data argued against an early tapering of the Fed's asset-buying programme, two Fed officials said on Monday such a move could still happen if the economy continues to improve.
Renewed pressure on the greenback saw the euro briefly pop above $1.3100 for the first time since May 9. It was last at $1.3068 with resistance seen at the overnight high of $1.3108. This is followed by $1.3141, the 76.4 percent retracement of its May 1-17 decline.
Against the yen, the greenback was at 99.67, having fallen as deep as 98.86, a low not seen since May 9. It has lost more than 4 percent from a 4-1/2 year high of 103.74 set last month.
Dealers were wary in case Japanese authorities protested at the rise in the yen, which has been putting pressure on an already weakening share market.
The dollar's fall against beaten-down commodity currencies was even more dramatic. The Australian dollar rallied more than 2 percent to $0.9792, posting its biggest one-day rise in about a year and pulling further away from a 19-month trough of $0.9528 plumbed on May 29.
The Aussie's near-term driver will come from the country's central bank policy decision due 0430 GMT.
The Reserve Bank of Australia (RBA) is widely expected to keep its cash rate steady at a record low 2.75 percent. Markets are giving a mere one-in-eight chance of a quarter point cut, though the sudden rise in the Aussie could make the decision a closer call. See for the latest rate poll.
"The RBA may keep the door open to lower the cash rate further amid the persistent slack in the real economy," said David Song, currency analyst at DailyFX.
"The central bank may have little choice but to carry its easing cycle into the second-half of the year as it aims to encourage a stronger recovery."