* Euro pulls back from three-week high hit on Friday
* Traders wary of the scope for disappointment on ECB
* Policy decisions due this week in euro zone, U.S., UK
By Nia Williams
LONDON, July 30 (Reuters) - The euro slipped on Monday as investors became wary that hoped-for action from the European Central Bank this week may fall short of expectations, prompting traders to take profits on gains made late last week.
Some in the market have speculated the ECB may reactivate its bond-buying programme to help cut Spanish and Italian borrowing costs, but traders were aware that Germany has repeated its opposition to this and they saw scope for disappointment.
The central bank meets on Thursday. Talk of policy action intensified after president Mario Draghi said last week the bank would do whatever it took to save the euro, a message echoed by German Chancellor Angela Merkel and French President Francois Hollande.
But German Economy Minister Philipp Roesler warned the ECB about any large-scale government bond purchases and a German government spokesman on Monday reiterated Berlin's opposition to any form of mutualisation of euro zone debt.
The euro was down 0.5 percent at $1.2259, retreating from a three-week high of $1.2390 hit on Friday, but still holding above a two-year low of $1.2042 hit last Tuesday on trading platform EBS.
"Draghi has to put some action behind his words last week ... The bias is towards disappointment and that's what's creeping into markets now," said Niels Christensen, currency strategist at Nordea in Copenhagen.
"The value we saw last week in euro/dollar is fragile."
Markets will keep an eye on any comments from U.S. Treasury Secretary Timothy Geithner, who is due to meet German Finance Minister Wolfgang Schaeuble and Draghi on Monday.
The U.S. Treasury said Geithner and the officials would discuss the U.S., European and global economies.
Markets were bracing for a busy week, with central bank decisions due in the United States and the UK as well as the euro zone, in addition to key U.S. jobs data on Friday.
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Before the ECB meeting, analysts said euro losses were likely to be limited.
"Clearly, if nothing is announced that would be a massive disappointment ... But there is an expectation that we're going to see something meaningful on Thursday," said Callum Henderson, global head of FX research for Standard Chartered Bank in Singapore.
But he said the euro's failure on Friday to close above a key technical level near $1.2325 was weighing on the currency.
The euro fell 0.8 percent to 95.85 yen, though it remained above last week's low of 94.12 yen, its lowest level against the Japanese currency in more than 11-1/2 years.
It struggled against the Swedish crown, which hit a 12-year high after data showed the Swedish economy grew much more than expected in the second quarter. The euro fell 1.3 percent to 8.3400 crowns.
The Australian dollar also rallied, reaching a record high of around A$1.1680 against the euro and a four-month high of US$1.0500 versus the U.S. dollar.
Many market players said the Australian currency's gains could be vulnerable however, given its close correlation with the global growth outlook.
"People are selling euro/Aussie and that provides Aussie/dollar with an indirect degree of support. But exposure there is pretty big if we get any negative economic developments in Asia and if Draghi and (Federal Reserve Chairman Ben) Bernanke do not deliver," said Daragh Maher, FX strategist at HSBC.
"Our view is we would sell Aussie on any firm break above US$1.0500."
The Federal Reserve holds a policy meeting on Wednesday but economists expect policymakers to sit on their hands for now.
The dollar was steady at 82.786 against a basket of major currencies, above a three-week low of 82.343 hit on Friday. Against the yen, the dollar eased 0.3 percent to 78.41 yen.
