* Dollar supported after previous day's slide in oil prices
* Euro hurt by lingering debt problems, hits 7-week low vs GBP
* Aussie dollar tumbles to 1-week low after surprisingly weak job data
By Hideyuki Sano
TOKYO, May 12 (Reuters) - The dollar dipped but held near a three-week high against a basket of currencies on Thursday as a rout in commodities and an uncertain outcome on Greece's debt problems lowered risk appetite and prompted traders to expect more unwinding of dollar-funded bets on risk assets, with its break above a trendline pointing to the chance of more gains.
The euro, bruised by concern that the problems in Greece could spin out of control despite policymakers' efforts to support it, hovered just above a three-week low against the dollar after having broken below its 55-day moving average, and touched a 1-½ month low against the pound.
Adding momentum to a sell-off in commodity-linked currencies, the Australian dollar tumbled more than 1 percent to a one-week low after surprisingly weak Australian jobs data reduced market expectations of a rate hike.
The decline in the euro and the Aussie dollar also reflected a broader recovery in the U.S. dollar, with its index against a basket of currencies having shot up to a three-week high on Wednesday, and more importantly breaking above a trendline that has capped it during its relentless fall since the beginning of this year.
"It has broken above a trendline that has lasted for four months. So you'd think the adjustment will be quite big," said Koji Fukaya, chief FX strategist at Credit Suisse.
The index <.DXY>, which has risen about 3.5 percent from a three-year low of 72.696 hit last week, last stood at 75.26, down 0.1 percent on the day but still holding near a three-week high of 75.419 struck on Wednesday.
Fukaya said it could target 77, a 50 percent retracement of its decline since January. Before that, a 38.2 percent retracement sits just under 76.
"People have been doing dollar-carry trades and yen-carry trades based on a moderate recovery in the global economy. That money is now flowing back," said Makoto Noji, a senior strategist at SMBC Nikko Securities.
Such trade had been popular because many market players bet that a moderate recovery in the global economy, led by red-hot growth in emerging economies, would boost demand for oil and other commodities while the Federal Reserve, concerned by still high unemployment, is likely to keep U.S. interest rates near zero for the near term, allowing speculators to borrow at little cost to fund their positions.
OIL'S SLIDE
But oil prices tumbled over 4 percent on Wednesday after an unexpected rise in gasoline stocks amid slowing demand sent prices into a tailspin, fuelling the second big commodities sell-off in a week.
"Oil prices had risen from around $80-90 after revolutions in the Middle East raised worries about oil supply. If you think the situation there is stabilising, you could argue that oil could fall back to levels from before that. That would mean more upside for the dollar," said Credit Suisse's Fukaya.
The euro traded at $1.4218
Sporadic buying set in after the euro had bounced off major support levels around $1.4150 -- near the mid-April low and a 38.2 percent retracement of the January-May rise to around $1.4145. There could be more bargain-hunting bids just above the top of the Ichimoku cloud on the daily chart, at $1.4118.
The euro also rebounded from a six-week low of 114.56 yen on
Wednesday to fetch 115.45 yen
The euro rose 0.1 percent against sterling to 0.8689 pound
The euro's outlook remained murky as speculation over whether Greece will receive more bailout funding kept risk appetite volatile as investors continued to price in a high probability that the country will eventually need to restructure its debt.
While many in financial markets tend to view the debt mess in Greece and other peripheral euro zone countries as being contained and unlikely to hurt the euro zone's bigger economies, some analysts say investors should not underestimate the impact because falls in Greek, Irish and Portuguese bond prices are causing sharp losses to European banks and could hit the financial system.
"Remember that 80 years ago, Austria's Creditanstalt went down. Although people thought the impact of a bank failure in a small European country would not be big, it affected other countries and snowballed into a financial crisis on a global scale. You shouldn't think that the current debt problems are peripheral," said Mitsuru Saito, chief economist at Tokai Tokyo Securities.
A broad recovery in the dollar also pushed the U.S. currency
to a one-week high against the yen. The dollar rose as high as
81.35 yen
The Australian dollar fell as low as $1.0585