FOREX-Euro pressured, Aussie up as inflation data cools rate cut talk

* Australian CPI comes in slightly above forecast

* Euro edges lower, major currency pairs mostly drift sideways

* Greek debt talks in focus later this week

By Lisa Twaronite and Ian Chua

SYDNEY, April 22 (Reuters) - The euro edged lower on Wednesday, pressured by continued uncertainty over Greece's debt negotiations, while the Australian dollar rose after inflation data suggested an interest rate cut was not imminent.

The euro drifted down about 0.1 percent to 128.29 yen , moving back toward its overnight low of 127.45. Against the greenback, the euro slipped about 0.1 percent to $1.0722.

On Tuesday, attempts to further push down the euro ended in failure, which traders said prompted a squeeze in short positions and lifted it off the session low of $1.0660.

But market participants have little incentive to take positions in the euro, with Greece's debt negotiations hanging in the balance. Athens risks running out of cash within weeks and has so far been unable to reach an agreement with its lenders on a deal that will disburse further aid.

Euro zone finance ministers will meet later in the week to assess progress made by Greece in its reform pledges.

"The Greek situation seems to be heading towards a conclusion," said Marshall Gittler, head of global FX strategy at IronFX Global.

"Even (Taiwan OTC: 6436.TWO - news) if the market expects a successful conclusion, it has to price in at least the possibility of a disaster. I expect that possibility to weigh increasingly on the euro until the uncertainty is over," Gittler said in a note to clients.

The Australian dollar was up about 0.7 percent at $0.7759 after rising as high as $0.7772, after core inflation - one of the Reserve Bank of Australia's favoured price measures - rose 0.6 percent in the first quarter, a touch higher than a forecast of 0.5 percent.

"It probably reduces the risk a little bit more that they will ease in May...the case (for easing) hasn't disappeared, it's a longish game but it certainly reduces the chance a little bit more for May anyway," said David De Garis, a senior economist at National Australia Bank.

Dovish signals from RBA head Glenn Stevens and minutes of the central bank's April 7 meeting had weighed on the currency this week.

Other major currency pair drifted in familiar ranges with investors apparently reluctant to break to new ground without fresh catalysts.

The dollar index, which tracks the U.S. unit against a basket of rivals, was steady on the day at 98.030.

The dollar last stood at 119.66 yen, flat on the day and not far from a one-week high of 119.83 yen set overnight.

"Markets were quiet overnight with no major news to drive proceedings," noted Imre Speizer, a senior strategist at Westpac. (Additional reporting by Cecile Lefort in Sydney; Editing by Eric Meijer & Shri Navaratnam)