* Liquidity thin due to U.S. Thanksgiving holiday
* Position adjustments before holiday hit Aussie vs US dollar
* But Aussie hits record high vs euro
* Euro looks vulnerable on charts, below ichimoku cloud
By Hideyuki Sano
TOKYO, Nov 25 (Reuters) - The euro struggled near a two-month
low as the euro zone debt crisis showed signs of spilling over
from Ireland to other countries even after Ireland unveiled an
ambitious austerity plan.
Traders said Portugal and increasingly Spain are seen as
potentially in need of help while Dublin's belt-tightening plan
has come under fire for sticking to economic growth assumptions,
unveiled earlier this month, seen as too optimistic.
Trade was thin, however, due to the U.S. Thanksgiving holiday
on Thursday. Some market players said the fall in the euro as
well as in the Aussie reflected short-covering in the U.S. dollar
on rising U.S. yields and before the holiday.
"The market is being driven by position adjustments typical
in November plus the euro zone problems," said Minori Uchida, a
senior analyst at the Bank of Tokyo-Mitsubishi UFJ.
The euro shed 0.2 percent on the day to trade at $1.3312. It
pierced through major support around $1.3333 to hit a two-month
low of $1.3284 <EUR=> on Wednesday.
Next support is pegged at $1.3232, a 61.8 percent retracement
of the August to November rally, a break of which could see the
single currency target $1.3000.
Against the Japanese currency, the euro fell 0.2 percent to
111.15 yen <EURJPY=R> after having fallen to 110.32 yen on
Wednesday, a level last seen in mid-September.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
TAKE A LOOK- Europe's debt problems []
Euro zone debt struggle http://link.reuters.com/dah65q
Multimedia on Euro zone crisis http://r.reuters.com/hus75h
EU bailout graphic http://link.reuters.com/fac76q
Euro zone debt graphic http://r.reuters.com/hyb65p
Interactive timeline http://link.reuters.com/nyx95q
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
Some traders said worries that private investors may have to
accept losses, or "haircuts", in any euro zone sovereign debt
restruturing from 2013 -- a proposal put forward by Germany --
could push up the premium investors will ask for holding euro
zone periphery debt, hurting the euro.
The euro has fallen about 10 points after peaking at $1.4283
on Nov. 4, shortly after the proposal was made.
"If Europe adopts the debt haircut option, even Spain could
be forced to ask for help as soon as December," said a trader at
a Japanese bank.
The yield spread of Portuguese and Spanish government bonds
over benchmark German Bunds hit a euro-lifetime high on
Wednesday. []
Technically the currency looks vulnerable after breaking
below key support of $1.3364, a 38.2 percent retracement of its
rally from June to early November and its August high and other
major support around $1.3333.
"I thought the support of the August peak would hold. Looking
at the way the euro's falling, it may be in a downtrend for a
long term," said a trader at a Japanese bank.
The currency has also fallen below support from the bottom of
the cloud on the daily ichimoku chart, which stood at $1.3371,
sending a major bearish signal. The last time it fell through the
ichimoku cloud was December 2009, preceding its six-month-long
downtrend.
For now, its 100-day moving average, now just above $1.33,
and its 200-day moving average around $1.3134, may offer some
support.
Few see a return to the four-year low of $1.1876 marked in
June in the wake of debt crisis in Greece as yet.
"The low was hit when there was no safety net in Europe and
markets were expecting the Fed to exit from its loose policy. As
the dollar is also under pressure from the Fed's quantitative
easing, it's hard to think the euro will fall to around $1.2,"
said BOTM's Uchida.
The dollar index <.DXY>, which tracks the greenback's
performance against a basket of major currencies, flirted with a
a two-month high just short of 80.000 overnight and was last at
79.69, down slightly on the day.
The dollar fell 0.1 percent to 83.50 yen <JPY=>, though many
traders expect it to stay in its well-worn range around
82.80-83.80 in the near term.
The greenback was aided by U.S. data showing a fall in new
claims for jobless benefits to two-year lows and another rise in
consumer spending, raising hopes of a stronger U.S. recovery.
Those figures helped spur a rally on Wall Street and to boost
U.S. bond yields, mildly helping the dollar, though data on U.S.
housing and durable goods orders was weak, painting a mixed
picture on the economy.
The Aussie dollar <AUD=D4> dropped 0.3 percent to $0.9771,
failing to maintain its initial rise sparked by Wall Street
gains.
Position adjustments ahead of the U.S. holiday and selling by
Japanese investors were among factors cited as hurting the
Aussie, and more stop-losses are seen below $0.9720.
But traders said Australia's strong economic fundamentals and
the currency's hefty yield are likely to underpin the currency.
In fact, the Aussie hit a record high against the euro
earlier in the session, with euro/Aussie falling to a record
trough around A$1.3553 <EURAUD=R> before climbing back to
$1.3630, up 0.3 percent on the day.
(Additional reporting by Ian Chua in Sydney; Editing by Joseph
Radford)
