* Euro edges up before ECB decision at 1245 GMT
* May see short-lived gains if rates left unchanged
* But seen under pressure if Draghi signals December cut
* Aussie hit by soft Australian jobs report
By Jessica Mortimer
LONDON, Nov 7 (Reuters) - The euro held firm on Thursday before a meeting of European Central Bank policymakers who are expected to resist strong pressure to cut interest rates.
Expectations the ECB would cut its 0.5 refinancing rate rose last week after a shock fall in the euro zone inflation but have since cooled. Most economists expect the central bank to wait and see whether the fall in inflation is sustained.
However, given that some in the market remain wary the ECB could announce a rate cut, analysts said the euro may see a small rebound if rates are left unchanged at 1245 GMT.
Any euro gains are expected to be short-lived as attention turns to Draghi’s news conference at 1330 GMT, when he may prepare the ground for a cut in December.
The euro was up 0.1 percent at $1.3523, holding on to most of Wednesday’s gains when a surge in German industry orders in September was seen as dampening the chances of an imminent cut in borrowing costs.
“Immediately after today’s ECB decision there is scope for the euro to fall to $1.3350,” said Ian Stannard, head of European foreign exchange strategy at Morgan Stanley, adding that Morgan Stanley expect it to fall to $1.30 by year-end.
“If the ECB lay the ground for a December move this would put more sustained pressure on the euro.”
The euro remained above strong chart support at $1.3462 from a trendline drawn from lows hit in early July.
Technical analysts say a break below this line could open the door to further losses for the euro, which only last week traded as high as $1.38 before the weak inflation data.
Stannard did not foresee a rate cut this week, but said the euro could come under pressure as Draghi spoke. Its losses would be greater if Draghi signalled the possibility of negative deposit rates, or if he said the euro’s strength was a risk to price stability in the euro zone.
After the ECB decision, focus will switch to Friday’s U.S. jobs report for October.
Euro/dollar could fall further if this data comes in on the strong side. This would suggest that the economy has weathered the partial government shutdown well, making it possible that the Federal Reserve could soon scale back monetary stimulus.
The dollar index was steady at 80.487, having hit a seven-week high of 80.93 on Monday.
Elsewhere, the Australian dollar fell 0.35 percent to $0.9487 after weak Australian jobs data.
“It looks a bit tough the Aussie to stay above $0.95 considering that the Australian central bank would seem eager to talk down the currency at such a level,” said Koichi Takamatsu, head of forex at Nomura Securities in Tokyo.
The dollar edged up 0.1 percent against the yen at 98.72 yen , close to a two-week peak of 98.86 set Friday.