* Euro buoyant on hawkish ECB signals
* Downside risk as attention returns to Greek crisis
* Dollar up against yen, fails to break 80.40 yen
By Nia Williams
LONDON, June 9 (Reuters) - The euro rose broadly on Thursday, recouping losses in the previous session, as investors geared up for hawkish signals from the European Central Bank that would boost the single currency's yield differentials.
But there was a risk of a correction in the euro if the ECB appeared dovish by flagging a slower pace of interest rate hikes later in the year, given a possible global slowdown and the lingering Greek debt crisis.
With many already pricing in the chances of a July rate hike, the single currency would need a very strong hawkish signal to test suspected options barriers around $1.4700.
ECB President Jean-Claude Trichet is expected to use higher staff inflation forecasts at Thursday's post-policy meeting news conference to justify a case for monetary tightening in July.
The euro was last up 0.4 percent against the dollar
A break above $1.4700 would open the door for the euro to test resistance around $1.4940, the May 4 high. On the downside, traders said key support was seen in at $1.4550, the 50 percent retracement of the May 4 to 23 fall.
Some analysts warned the continued possibility of Greek debt restructuring, which was raised again on Wednesday in a letter from German finance minister Wolfgang Schaeuble, meant the euro could come under pressure after the ECB meeting. [ID:nB4E7G900O]
"More significant than the rate hike signal will be Trichet's comments on the ECB's attitude to Greek debt situation," said Adrian Schmidt, FX strategist at Lloyds. "He will be asked about the Schaeuble letter which could throw the cat among the pigeons.
"In the short-term it's hard to see Trichet saying anything that positive. Once the rate hike is priced in the euro will be moving primarily on the Greek debt story. Consequently the downside is favoured today for the euro."
A report obtained by Reuters on Wednesday from the EU, ECB and IMF mission to Greece added to the uncertainty hampering the euro zone. The report said the next disbursement of Greek aid could not take place until it corrected the under-financing in its adjustment programme. [ID:nB4E7GU02C]
The Bank of England will also announce its June rate decision on Thursday but is widely expected to keep rates on hold at record lows. The euro
YEN RETREATS
The dollar recouped most of its losses against the yen having slumped to a one-month low of 79.69 yen
Domestic and foreign brokers, as well as margin traders were buying the greenback on dips. The move alleviated immediate downside pressure but failed to break through a pivot point at 80.40 yen.
Despite its gains against the yen, the dollar was down 0.2 percent on a basket of currencies <.DXY> at 73.754 after the Federal Reserve's beige book summary of economic conditions confirmed that the economy slowed in May. [ID:nN08248761]
Investors will look to the release of U.S. initial jobless claims due at 1230 GMT for further clues on the state of the world's largest economy, which has endured a recent slew of lacklustre data.
Although the perception the Federal Reserve will maintain ultra-loose monetary policy for some time has weighed on the dollar, Commerzbank said in a note that a faltering global recovery could underpin the greenback which usually benefits from safe-haven flows.
"Key rates in the US are not going to change for some time. As a result the USD might increasingly turn into a financing currency for carry trades. That would also mean that weak macro data would once again support the dollar," they said in a note.
The Australian dollar
New Zealand's central bank held rates steady on Thursday but also set the stage for higher rates, saying hikes were needed as the economy bounces back from the Christchurch earthquake. [ID:nL3E7H709W]
The more hawkish tone helped the kiwi