* Euro rises but resistance near $1.2675
* Banks stress tests eyed in Europe
* Charts suggest possible rise to $1.28 near term
(Updates prices, adds details, changes byline)
By Nick Olivari
NEW YORK, July 7 (Reuters) - The euro rose against the dollar on Wednesday in technical trading after breaking through resistance levels, which prompted some investors who had bet against the single currency to buy to prevent losses.
Concerns about the growth outlook for the global economy and plans to test the financial health of European banks had weighed on the euro for most of the session.
European regulators on Wednesday haggled over what details to reveal about stress tests of about 100 banks in a dispute that could undermine confidence in the health checks on the region's lenders. For more details see []
But the euro/dollar broke through technical resistance around 1.2610, said Kathy Lien, director of research at GFT Forex in New York.
"When it broke through that, it broke higher and from this position there is no major resistance until 1.2676, the May high," Lien said.
Last week's data on euro/dollar short positions also indicated there was only a small decline in euro short positions, Lien said, which means there was still a lot of opportunity for a short squeeze in the euro/dollar.
Investors who bet against a currency are often forced to buy the currency to prevent losses if the currency actually gains.
The euro was last at $1.2645, up 0.2 percent on the day<EUR=>, even after worse-than-expected data showed factory orders in Germany, the euro zone's largest economy, fell for the first time this year in May. []
The euro rose to $1.2663 on trading platform EBS on Tuesday, its highest level in about seven weeks.
The euro gained support earlier this week after a solid Spanish syndicated debt sale on Tuesday eased euro zone debt fears and weak U.S. data hit the dollar.
Analysts said the single currency could rise further in the short term as a raft of weak U.S. data prompts investors to unwind long dollar positions and short euro positions built up since the start of the year.
German Chancellor Angela Merkel said on Wednesday the euro has stabilized and should be on a stronger foundation than before the Greek crisis thanks to debt-reduction measures being implemented in the euro-zone. [].
Still, most analysts in a Reuters poll believe the euro will stay weak against the dollar over the coming year. The survey of about 60 analysts, taken July 2-7, predicted the euro would fall to $1.24 in one month and $1.20 in three months, then to $1.18 in six months and in mid-2011.[]
"The euro remains vulnerable to another downturn as investors begin to look to the 16-member bloc's growth prospects amid a back drop of strict budget cuts and the potential for another downturn in the global economy," said Omer Esiner, a chief market analyst at Commonwealth Foreign Exchange in Washington, D.C.
The dollar fell 0.3 percent to 87.32 yen <JPY=>, not far from a seven-month low of 86.96 yen hit on EBS last week <JPY=EBS>. (Reporting by Nick Olivari; Additional reporting by Vivianne Rodrigues; Editing by Kenneth Barry)
