FOREX-Euro eases, support seen from trimming of bearish bets

* Euro remains not far from 7-week high vs dollar

* Trimming of euro bearish bets may persist -analysts

By Masayuki Kitano

SINGAPORE, Aug 24 (Reuters) - The euro eased versus the dollar on Friday but still hovered near a 7-week high hit the previous day, its downside seen limited in the near term by the potential for the further unwinding of euro short positions.

The euro, which rose after Fed minutes on Wednesday suggested the U.S. central bank may opt for more monetary stimulus "fairly soon", got a further lift on Thursday after sources said Spain is negotiating with the euro zone over conditions for aid..

The Spain news helped offset a scaling back in expectations of an imminent U.S. easing after St. Louis Federal Reserve President James Bullard said the minutes are a bit stale given stronger data since the Fed's last policy meeting.

The euro dipped 0.1 percent to $1.2554, having hit a high of $1.2590 the previous day on trading platform EBS, its highest level in about seven weeks.

Against the Australian dollar, the euro touched a six-week high of A$1.2047 earlier on Friday.

"The moves that have taken place are nothing more than position unwinding," said Satoshi Okagawa, senior global markets analyst for Sumitomo Mitsui Banking Corporation in Singapore, referring to the trimming back of euro-bearish bets.

Such unwinding may persist in the near term given a recent accumulation of short euro positions.

"Various potential pitfalls for the euro are coming up, so people want to sell when it rises. They sell and then buy back, sell and then buy back. There has been a continuation of that," Okagawa said.

The euro has bounced since hitting a two-year low of $1.2042 in late July, buoyed by expectations that the European Central Bank will announce plans to help lower Spanish and Italian bond yields at its policy meeting on Sept. 6. The euro could come back under pressure if the ECB disappoints the market. Another event that the market awaits is a German constitutional court ruling on the European Stability Mechanism, the permanent European rescue fund, due on Sept. 12.

The medium-term outlook for the euro remains murky, but the single currency might rise to around $1.27 to $1.28 in the near term, said Sim Moh Siong, FX strategist for Bank of Singapore.

"There's probably a bit more room for the further unwinding of short euro positions in the crosses, so I think we might see a bit of a higher euro in the interim," he said.

The dollar, which had slid against the yen following the release of the Fed minutes on Wednesday, gained a bit of respite versus the Japanese currency, rising 0.1 percent to 78.59 yen .

Since U.S. economic indicators released after the Fed's most recent policy meeting were fairly upbeat, traders are divided on exactly what the Fed will decide at its next meeting in September, said a trader for a major Japanese bank in Bangkok.

The market is now hunting for clues on the latest thinking of Fed Chairman Ben Bernanke, who will give a speech at the annual informal conference of central bankers and economists at Jackson Hole, Wyoming at the end of this month.

"Views are split and I think we will get some sort of conclusion at Jackson Hole," the trader said.