FOREX-Euro resists further drop, eyes on Draghi

* Dollar index eases after hitting fresh seven-month highs

* Euro trades back above $1.07

* U.S (Other OTC: UBGXF - news) . holiday may weigh on trade

* China industrial (Other OTC: CIND - news) output in line with forecasts, Aussie unfazed (Repeats to more subscribers)

By Patrick Graham

LONDON, Nov 11 (Reuters) - The euro held above $1.07 on Wednesday, recovering from another charge by the dollar in the previous session but still looking shaky in trade thinned out by the U.S. Veterans Day holiday.

The greenback had looked to be steaming higher again on Tuesday after a brief period of consolidation following strong U.S. jobs numbers last week which many see as making all but certain a rise in Federal Reserve interest rates next month.

But the debate this week among analysts and traders at the major banks has raised a number of potential barriers to a push past levels around $1.0450 per euro that stymied the greenback in March and April (LSE: 0N69.L - news) .

Chief among those is the suspicion that the renewed falls in the euro in the past week may mean there is less pressure on the European Central Bank to ease policy aggressively, as many were expecting, in December.

"There are a lot of similarities to the situation we saw in April and May," said Simon Smiles, Chief Investment Officer for Ultra-High Net Worth individual clients at giant Swiss asset manager, UBS Wealth Management.

"Not particularly on currencies but last week we saw an unwinding of all the trades that people had piled into on execptations of more QE by the ECB."

Analysts pointed to appearances by European Central Bank chief Mario Draghi as the best chance of fresh direction for the market over the next couple of days. Draghi was speaking in London on Wednesday though the topic is financial regulation and a European parliament hearing on Thursday may see him address monetary policy more directly.

"The moves today look technical more than anything but there is some dollar weakness," said Ulrich Leuchtmann, head of FX research at Commerzbank (Xetra: CBK100 - news) in Frankfurt.

"The news (of a Fed hike in December) is priced in basically, so its difficult to see what may be the immediate driver for another rally. What the ECB will do next month is the big unknown."

Draghi's hints last month of the prospect of cuts in the ECB's already negative interest rates and an expansion of its money-printing programme sparked a slide in the euro.

The euro last stood at $1.0712, recovering after having slid below $1.07 for the first time in over six months overnight. The dollar index fell 0.1 percent to 99.196.

The Australian and New Zealand dollars had been the biggest movers in a subdued Asian session on currency markets, both up almost half a percent against the dollar. Commerz's Leuchtmann put that down to the greater sensitivity both have shown to broader dollar moves over the past year.

The Reserve Bank of New Zealand's latest financial stability report warned of risks from a 27 percent surge in house prices this year in the capital Auckland, read by markets as a sign the bank might have to keep a tighter rein on policy in response.

"The kiwi jumped on these headlines as the market interpreted them as less dovish," said Sue Trinh, a strategist with RBC Capital Markets.

Sterling, which has also recovered some ground after sharp falls last week, inched higher after a mixed bag of wage data and jobs numbers which at least did not worsen the broad economic outlook. By 1300 it was 0.4 percent up on the day at $1.5175. (Editing by Richard Balmforth)