(Updates prices, adds details)
* Euro retains strong gains seen this week
* Focus shifts from Greece as it is set for emergency funds
* U.S. ISM manufacturing data in focus on Friday
By Anirban Nag
LONDON, July 1 (Reuters) - The euro hovered near a three-week high against the dollar on Friday, buoyed by better risk sentiment with more gains likely as investors shift their focus from the euro zone's sovereign debt troubles to upcoming U.S. economic data.
The common currency was also bolstered by speculation that some Asian central banks which are said to have intervened and bought dollars in their respective currency markets, could recycle those proceeds into the euro.
It took weak euro zone manufacturing surveys within its stride, as the data did little to alter strong expectations that the European Central Bank would raise interest rates next week.
The euro hit a three-week high of $1.4553 early in the European session, when it pushed through a big options barrier around $1.4550. It eased to trade at around $1.45 on news that Moody's has downgraded Munich Reinsurance Life Reinsurance E.E.C.A .
Despite that, it is still up nearly 3 percent from Monday's trough around $1.4100 in a dramatic week that saw market sentiment swing from worries that Greece would go bankrupt to relief that it would get through the crisis, against a backdrop of violent protests and general strikes over austerity steps.
The Greek parliament approved a detailed austerity plan on Thursday, paving the way for 12 billion euros of international aid. .
Resistance for the common currency is seen at around $1.4570, the 61.8 percent retracement of the euro's fall from its May 4 high of $1.4940 to its recent low of $1.3970 on May 23 with the 55-day moving average of $1.4404 likely to provide support.
Analysts said the euro could gain more ground if the U.S. ISM manufacturing report surprised on the upside. Risk appetite was boosted on Thursday after data showed factory activity in the U.S. Midwest accelerated in June, fostering hopes of a pick-up in economic growth.
"The market is bullish on risk and looking to buy euros," said Paul Mackel, director of currency strategy at HSBC. "It could rise to $1.47 against the dollar if the data pulse from the U.S. keeps getting better. The Greek issues still linger, but there is a bit of calm now with the markets' focus on data."
The euro was also well-supported against the yen and the Swiss franc with traders saying the market was starting to rebuild longs ahead of Thursday's European Central Bank monetary policy meeting, at which it is expected to raise interest rates again. .
"There is a bit more upside in the euro ahead of the ECB meeting and if (President Jean-Claude) Trichet strikes a hawkish bias," said Chris Walker currency strategist at UBS. "But a lot will be contingent on current economic conditions."
DOLLAR SHORTS
Some investors were looking to cover short positions in the dollar ahead of the weekend and lock in profits on outperforming commodity currencies such as the Australian and New Zealand dollars after China's purchasing managers' index came in slightly below expectations at 50.9.
The dollar index , which tracks the greenback's performance against a basket of major currencies, was up 0.2 percent at 74.442.
The dollar made solid gains against the Swiss franc which was broadly under pressure as investors unwound long positions with worries about Greece fading into the background for now. The dollar was up 0.7 percent at 0.8462 francs while the euro gained 0.8 percent to 1.2295 francs . The single currency was on-track to post a 4 percent weekly gain.
"The unwind of the Swiss franc safe-haven trade was very much in evidence on Thursday and with the Ecofin likely to approve the next 12 billion tranche of aid over the weekend, we see scope for Euro/Swiss franc to extend gains well beyond the two big figures seen so far," BNP Paribas said in a note.
Against the yen, however, the dollar edged higher after solid bids by investment trust funds around 80.50 yen. Retail investors were pouring their summer bonuses into foreign investment trust funds, drawing yen-selling demand.
Dollar/yen last traded up 0.3 percent at 80.75 yen, but exporters cited sell orders lined up above 81 yen.
Meanwhile, sterling fell to a 15-month low against a basket of currencies and the euro after a UK survey showed manufacturing activity grew at its slowest pace in almost two years in June, backing expectations that rates will be at ultra-low levels in the coming months.
Sterling was last down 0.3 percent at $1.5996 while the euro was up 0.2 percent at 90.56 pence. (Editing by Stephen Nisbet; anirban.nag@reuters.com; +44 207 542 8399; Reuters; Messaging: anirban.nag.thomsonreuters.com@reuters.net)