* Talk of U.S. bank betting on euro rise to $1.2675 * Investors await Bernanke speech, ECB meeting * Bernanke set to sustain easing expectations By Wanfeng Zhou NEW YORK, Aug 28 (Reuters) - The euro rose against the dollar for the first time in three days on Tuesday, buoyed by hopes of bond-buying by the European Central Bank to contain the debt crisis and expectations of further easing by the Federal Reserve. Investors awaited key events in the coming days and weeks, including a speech by Fed Chairman Ben Bernanke on Friday, a policy meeting by the ECB on Sept. 6 and the German Constitutional Court's ruling on the euro zone's permanent bailout fund on Sept. 12. Bernanke is expected to sustain expectations for a third round of quantitative easing (QE), though he could keep markets guessing about the timing of such an action. Further QE bodes ill for the dollar as it is tantamount to printing money. "Keep in mind that the third-quarter rebound is not as robust as some had hoped so far and that there is a lot of data that will come out before the September (Fed) meeting," said Michael Woolfolk, senior currency strategist at BNY Mellon in New York. "If he does confirm or make comments that are consistent with further monetary easing, then that would be viewed as negative for the dollar and positive for risk." The euro rose 0.5 percent to $1.2567, having hit a session peak of $1.2573, not far from a seven-week high set on Reuters data last week. Strong resistance for euro/dollar lies around $1.2600, the 100-day moving average of 1.2601. Traders said liquidity was thin and that the euro's gains were fueled by a large U.S. investment bank buying a one-month euro/dollar option with a strike price at $1.2675, suggesting the euro could rise to those levels in coming weeks. "There's a very large euro call (option) that has been the catalyst for the rise but I think we will play the ranges this week," said Richard Wiltshire, chief FX broker at ETX Capital. "Everyone will sit on their hands ... until we get some kind of interest from Jackson Hole. Negative news from the euro zone seems to have abated a little bit." Market players also trimmed bets in favor of the dollar after a media report flagged the possibility of a downgrade to the U.S. credit rating. On Tuesday, the euro also climbed 0.3 percent to 98.74 yen . The dollar fell 0.1 percent to 78.63 yen. The dollar has come under pressure against most major currencies, including the euro, since minutes last week of the U.S. central bank's latest policy meeting suggested the Fed could launch another round of stimulus fairly soon. ECB President Mario Draghi was also scheduled to speak at Jackson Hole, but cancelled his appearance on Tuesday, citing a heavy workload. The euro has staged a recovery since European Central Bank chief Mario Draghi said he would do whatever it took to preserve the euro. But the rally appeared to be waning with details of the ECB's plan to buy peripheral euro zone debt still uncertain. Germany's powerful Bundesbank opposes bond buying, although top ECB official Joerg Asmussen said on Monday that policymakers would tailor the new plan to dispel concerns it funds governments. Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington, warned of the risk of disappointment. "Given that market expectations remain so elevated, the risk of disappointment remains high. Lack of Fed QE3 or a watered-down plan from the ECB would leave the euro vulnerable," he said.

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