* Fed announces new stimulus program * Fed extends low-rate pledge * Dollar falls to 7-month low versus yen * Euro hits 4-month high against dollar By Julie Haviv NEW YORK, Sept 13 (Reuters) - The dollar fell broadly in choppy trade on Thursday, hitting a seven-month low against the yen and a four-month trough versus the euro as the Federal Reserve announced another aggressive stimulus program to bolter the U.S. economy. In a significant shift in monetary policy, the Fed said it would buy $40 billion of mortgage debt per month and will continue to purchase those and other assets until the weak employment picture shows marked improvement. Fed officials also said they were not likely to raise interest rates from current rock-bottom lows until at least mid-2015. Previously, it had set such guidance at late 2014. "The Fed news was very bullish for risk assets and people were quite comfortable selling the dollar against almost everything, particularly emerging market currencies and the Australian dollar," said Brad Bechtel, managing director at Faros Trading in Stamford, Connecticut. The euro initially tumbled to a session low of $1.2856 following the release of the Fed's statement, a result of illiquid trade, but later it hit a high of $1.3001. "At $1.30 investors are comfortable selling the euro and by the end of the month the currency should be lower because there is still a lot of wood to chop with regard to the debt crisis and there is also the threat of a lot of headline risk," Bechtel said. The euro last traded at $1.2984, up 0.7 percent on the day and its highest since May 9. Many market participants expected the Fed to launch a third asset purchase program after the close of a two-day meeting. A new round of bond purchases, known as quantitative easing, or QE, is viewed as negative for the dollar because it is tantamount to printing money and dilutes its value. "I was expecting them to keep it more open-ended, but overall, we're getting QE3," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington, D.C. "The knee-jerk reaction to sell the dollar is the correct one," he said. "I do wonder how much lower the dollar can go, though, given that much of this was priced in." Against the yen, the dollar last traded at 77.48 yen, down 0.4 percent on the day, after hitting a low of 77.11, its lowest since Feb. 9. Further falls would put markets on alert for possible intervention by Japanese monetary authorities to stem the rise in the yen, traders said. In its prior two rounds of QE, the Fed bought about $2.3 trillion in bonds to lower long-term interest rates. While lower rates may prod more U.S. business and residential investment, it is seen as dollar-bearish since there is less incentive for foreigners to buy what could be lower-yielding U.S. debt.