(Reuters) - The euro pushed higher in Asia on Thursday but failed to crack resistance as investors remained wary due to European debt auctions later in the session, while downbeat Australian jobs data rained on the Aussie's parade.
The euro pushed against resistance at $1.2880 before falling back to $1.2854, though it remained far off Friday's 17-month low of $1.2624 on the EBS trading platform.
Against the yen, the euro was buying 98.66 yen after earlier rising to 98.84 yen, just shy of its two-week peak of 98.90 yen hit on Wednesday. Since dropping to an 11-year nadir of 97.04 yen on EBS on Monday it has gained about 2 percent.
While concerns about the euro zone's debt woes will continue to pressure the single currency, some strategists say its short-covering rally could still have room to run.
"The euro could target 90 yen within this year, but for now everyone is underweight euro and covers short positions whenever there is good news about Europe," said Citibank Japan's chief foreign exchange strategist Osamu Takashima.
Bond sales by Spain and France later on Thursday will test market sentiment. So far, debt sales in the euro zone have gone without a major hitch in the wake of Standard & Poor's mass downgrade of euro zone sovereign debt last Friday.
Portugal managed to sell all of its planned issuance on Wednesday, while a German auction drew strong demand.
One risk to continued euro gains is Greece's need to reach a bond swap deal with its creditors to avoid the prospect of default when 14.5 billion euros ($18.58 billion) of bond redemptions come due in March.
The single currency's break above the January 13 peak of $1.2879 and its 21-day moving average at $1.2875 would open up a test of the January 5 high of $1.2946. A break above $1.3145, the major low in October, could signal a bottom has formed, traders said, but many remain skeptical whether the euro can breach the $1.30 level. Some investors were said to be replacing cash positions with downside puts, with maturities set after the Greek bond redemptions on March 20.
On Wednesday, improved risk appetite lifted the euro on news that the International Monetary Fund is seeking to more than double its war chest by raising $600 billion in new resources to help countries deal with fallout from the euro zone debt crisis.
The buoyant euro helped push the dollar index .DXY to two-week lows. It stood at 80.516, down 0.1 percent and recoiling further from a 16-month peak of 81.784 hit on Friday. Firm support was seen around 80.100, near the January 5 trough and a 23.6 percent retracement of the October-January rally.
Against the yen, the dollar was little changed at 76.76.
The brighter mood that lifted the euro also helped commodity currencies overnight, and they were boosted further by gains on Wall Street after Goldman Sachs' earnings exceeded analysts' expectations and dispelled some anxiety over bank profits.
But the Aussie dollar slipped to a session low of $1.0373 after data showing Australian employment fell by 29,300 in December, against market expectations for a rise of 10,000. It stood at $1.0381, down 0.4 percent, moving away from an 11-week high of $1.0450 set on Tuesday and also falling below its 200-day moving average at $1.0407.
Labor market weakness could shore up expectations for a third rate cut at the Reserve Bank of Australia's February 7 policy meeting. Full-time employment rose by 24,500 and the unemployment rate was 5.2 percent, slightly below market expectations of 5.3 percent.
Surprisingly soft inflation data in New Zealand also weighed on the kiwi, which was down 0.2 percent at $0.8016, moving away from a 2- month peak of $0.8082 set on Wednesday.
"It highlights, along with other data, that the domestic economy is waning, and it provides the RBNZ (Reserve Bank of New Zealand) the ability to cut rates if it needed to," said Philip Borkin, an economist at Goldman Sachs. ($1 = 0.7802 euros)
(Additional reporting by Masayuki Kitano in Singapore, Antoni Slodkowski in Tokyo and Ian Chua and Reuters FX analyst Krishna Kumar in Sydney; Editing by Michael Watson)
