(Reuters) - The euro slipped against the dollar on Thursday after the European Central Bank warned about the impact on the currency and banks of private sector involvement in the region's debt crisis. The single currency pulled away from a one-month high hit against the dollar the previous day on short covering -- investors backing off bets on further losses. While signs of more action from European policymakers toe deal with the region's debt problems support the euro, investors remain cautious about pushing the currency higher given the barriers policymakers face to finding a lasting solution. The euro slipped 0.2 percent on the day to a session trough of $1.3754 after the ECB said forcing private bondholders to accept losses on euro zone sovereign debt could damage the reputation of the euro. "People seem to think the ECB comments which were anti-PSI were definitely the catalyst," said a trader in London. The move highlighted wariness among investors to bet on more gains for the single currency unless euro zone authorities unveil a convincing strategy to fight the debt crisis at a summit on October 23. "Unless we really break through the $1.37-1.38 area, it might be tough to build euro long positions up here," said Jeremy Stretch, currency strategist at CIBC. He said the summit was key to whether the euro would extend its gains. Investors will need to be convinced that officials have a unified, lasting solution to help debt-ridden countries including Greece, while limiting the impact elsewhere. "We need to see recognition that France and Germany are on the same page, and the recognition that officials are looking for a pan-European solution, rather than national ones. Also, the rescue fund has to be large enough to be able cope with the scale of the problem," Stretch said. The euro pulled further away from a one-month high of $1.3834 hit on trading platform EBS on Wednesday. "I want to give this risk-on move a bit more time. But we have a history of Europe giving us far too little, far too late," warned Robert Rennie, chief currency strategist at Westpac Bank in Sydney. "So I'm very conscious of the fact that coming to the G20 finance meeting this weekend and the leaders summit the following weekend, I want to start selling the euro, the Aussie and risk again." The Australian dollar traded 0.2 percent higher at US$1.0152. It touched a three-week high of $1.0235 after data showed Australian employment rose by a surprisingly strong 20,400 in September, the biggest increase in seven months. EURO RESISTANCE The euro's rally on Wednesday stopped short of technical resistance around $1.3848, the 50 percent retracement of its late August to early October slide. Above that further resistance lies at $1.3937, which corresponds to a couple of daily highs hit in September. The single currency has rallied nearly 3 percent versus the dollar this week, a move which has keep the U.S. currency on the back foot versus a currency basket. Euro selling on Thursday boosted the dollar index 0.2 percent to 77.14. It hovered around 77.11, where technical analysts cited resistance in the form of the index's 38.2 percent retracement of its May-October rally. Above that, traders said there was more resistance at the base of the Ichimoku cloud at 77.57. The index has traded below the cloud, a popular Japanese technical indicator, for the past three months. The euro traded around 106.20 yen, pulling back from a one-month high near 107.03 yen hit the previous day. Despite its gains versus the euro, the dollar traded 0.1 percent lower at 77.11 yen. The dollar had hit a one-month high around 77.48 yen on Wednesday. Yen-buying by Japanese exporters weighed on dollar/yen and cross/yen, traders said. With the start of a new fiscal half-year in Japan this month, there is focus on the investment stance of Japanese investors. Japan's Fukoku Life Insurance told Reuters on Thursday that it will reduce its net purchases of foreign bonds through March from its original plan. (Additional reporting by Jessica Mortimer, Asia Forex Team)

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