* Euro initially falls to five-week low vs dollar on Draghi comments * ECB leaves rates unchanged at record low * U.S. jobless claims fall in latest week * Focus shifts to U.S. non-farm payrolls data By Julie Haviv NEW YORK, Jan 9 (Reuters) - The euro traded marginally higher against the dollar on Thursday, recovering from a sharp sell-off spurred by cautious comments made by European Central Bank President Mario Draghi after the bank left interest rates at record lows. During an ECB news conference after the central bank left its main interest rate unchanged at a record low of 0.25 percent, Draghi said the central bank is monitoring money market conditions and hinted that there maybe downside risks to its current view on inflation. "The risks surrounding the economic outlook for the euro area continue to be on the downside. Developments in global money and financial market conditions and related uncertainties may have the potential to negatively affect economic conditions," Draghi said during a news conference. The euro fell as low as $1.3547, its lowest since Dec. 5, after Draghi's comments. It last traded at $1.3594, up 0.1 percent on the day. Against the yen, the single currency also traded up 0.1 percent at 142.48. "All that seems to have fuelled speculation that more easing maybe on the cards before long," said Valentin Marinov, G10 strategist at CitiFX, a division of Citigroup. "We suspect that the euro could remain under some pressure in the near term," he said. The ECB's outlook contrasts with the U.S. Federal Reserve, which last month announced it would start paring the amount of bonds it buys each month. Relative interest rates should continue to favor the dollar over the euro. "Draghi sounded very cautious on the outlook for growth and said inflation would remain subdued," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington D.C. "By his own account, Draghi's language on accommodative policy 'showed firmer words', which contrasted the outlook for Fed policy and sent the euro sharply lower this morning," he said. There were some positive signals in Europe on Thursday. German industrial output beat forecasts, while Portugal was the latest recovering economy on the euro zone's periphery to meet strong demand for a bond issue by syndication. Some 14 percent of Ireland's issue earlier this week was seen as taken up by non-euro zone investors who will have to buy euros to buy the bonds. Market participants are now firmly focused on Friday's U.S. nonfarm payrolls report. The number of Americans filing new claims for unemployment benefits last week fell slightly more than expected to a seasonally adjusted 330,000, pointing to an economy that was continuing to gain steam. The U.S. central bank said last month it would begin trimming its stimulative monthly bond purchases, and minutes from the Fed's most recent meeting showed its top officials were keen to steer a delicate path and many of them stressed that future decisions were not set in stone. Upbeat data on U.S. private sector jobs growth released on Wednesday lifted forecasts for Friday's jobs data. Analysts are looking for 196,000 jobs to have been created in December. The report may provide more clues as to how quickly the Fed will cut back on its bond-buying program this year. Against the yen, the dollar last traded 0.1 percent higher at 104.94 yen, according to Reuters data.