FOREX-Euro edges up after ECB decision, market awaits inflation forecasts, Draghi

* Euro pares losses before ECB inflation projections

* Dollar weaker before Friday jobs data

* Norwegian crown hits 4-year low vs euro

By Laurence Fletcher

LONDON, Dec 5 (Reuters) - The euro edged up on Thursday after the European Central Bank kept interest rates on hold, with traders on the lookout for the bank's inflation forecasts and any signs it may take more action to prevent deflation.

Investors had expected no change in rates after the ECB's surprise cut to a record low of 0.25 percent last month, and will now scour the bank's projections that are expected to point to inflation remaining below target into 2015.

That would raise pressure on ECB President Mario Draghi to take action to avoid a slide towards deflation, although a rise in annual euro zone inflation last week to 0.9 percent in November gave the bank some room to manoeuvre.

The euro rose to $1.3595 from $1.3588 against the dollar , leaving it down marginally on the day. It had earlier hit $1.3640, its highest since late October.

"It would have been a surprise for the ECB to have acted one month after their rate cut," said Simon Smith, head of research at FxPro.

But he pointed to higher money market rates, as banks repay lending from the ECB's long-term refinancing operation (LTRO), and a rising currency, which has made exports less competitive, as factors that have "served to undermine last month's easing".

"The main risk is that hints on policy or on the currency take some of the wind out of the euro's sails," Smith said.

Ulrich Leuchtmann, head of currency research at Commerzbank (TLO: CB-U.TI - news) in Frankfurt, also said the euro's strength could be called into question if the ECB were to detail plans for another LTRO, giving banks access to cheap cash, though at least one senior policymaker has suggested that is not in the offing quite yet.

The Norwegian crown fell to a four-year low of 8.4210 crowns per euro after Norway's central bank pushed back the first interest rate hike by a year.

Trading volumes in the currency pair were double the average over the past month, according to data from the Reuters dealing platform.

Investors were also cautious ahead of the key U.S. non-farm payrolls report on Friday, forecast to show further growth after the ADP National Employment Report showed U.S. private-sector hiring rose in November at the fastest clip in a year.

Any upside surprise in the payrolls report may lead to another round of speculation that the Federal Reserve might yet start scaling back its massive bond-buying stimulus programme this month, although most in the market expect it in March.

The yen gained as stock markets fell, with European shares losing ground for a fourth straight day. Investors often flock to the yen in times of market stress.

The dollar slipped 0.3 percent to 102.06 yen, having earlier this week risen as high as 103.38. The dollar index was down marginally at 80.644.