* Euro steadies, off lows vs Swiss franc, dollar
* Activity subdued as market in holiday mode
(Adds quote, updates prices, changes dateline prvs TOKYO)
By Tamawa Desai
LONDON, Dec 24 (Reuters) - The euro held its ground on
Friday after rebounding from a record low against the Swiss
franc and a three-week low versus the dollar, but gains were
curbed as investors remained wary about euro zone debt problems.
Traders said the euro's rebound was overdue particularly
against the Swiss franc after heavy franc buying by hedge funds
had helped the single currency hit a series of record lows this
week to the point where technical signals indicate an oversold
market.
The market showed limited reaction to Fitch Ratings
downgrading late on Thursday Portugal's long-term and local
currency ratings by one notch to A-plus, with a negative
outlook. The downgrade puts Fitch's rating for Portugal on a par
with Moody's A1 rating, but still two notches above that of
Standard and Poor's A-minus. []
"(Fitch's move) was widely expected to some extent, and it
was one notch only so there was not much reaction," said James
Ashley, macroeconomist at RBC Capital Markets.
Little action took place with volumes drying up heading into
the Christmas holidays. U.S. markets are shut on Friday along
with many European centres.
"In this type of market condition, it's very hard to take a
position because you'll just get whipped out and that's why
there are hardly any orders. People are waiting for January when
liquidity returns to work out what they want to do," a trader at
a U.S. investment bank said.
"The euro is still a sell-on-rally trade. Anything above
$1.32 is worthwhile selling in my view and probably there won't
be any buyers until the low $1.30s, where we could see some
Asian central bank interest."
By 0812 GMT, the euro was slightly higher at $1.3130 <EUR=>,
off a three-week low of $1.3055 set on Thursday.
The euro has managed to clutch to its 200-day moving
average, now at $1.3091, for the past week, drawing some support
from central banks' buying as well as from hopes that China may
step up its support for euro zone peripheral countries.
A breach of $1.3200 could trigger a move back towards the
Dec. 17 high around $1.3360.
Versus the Swiss franc, it was at 1.2607 franc <EURCHF=R>
having bounced off an all-time low around 1.2440 set this week
as the pair's oscillators, such as the RSI, showed the
possibility of a near-term oversold position.
UBS analysts said in a report to clients the bank's flow
data shows hedge funds have been adding close to record amounts
of francs in the past eight weeks, with record buying both
against the euro and the dollar last week.
"The strong trend (in the Swiss franc) suggests that further
short term franc strength may be likely. However, positioning
points to increasing risks of holding aggressive longs," they
said.
The dollar was flat at 82.97 yen <JPY=>, having hit a 1-1/2
week low around 82.83 yen on Thursday. It was near the bottom
end of a wider range roughly between 82.40 and 84.40 seen since
late November.
In contrast, the Australian dollar hit six-week highs at
$1.0067 on Thursday, and was last at $1.0032 <AUD=D4> on
interest from real money accounts looking for exposure to higher
yields and a brighter economic outlook.
(Additional reporting by Hideyuki Sano in Tokyo; Editing by
Toby Chopra)
