* Dollar struggles before U.S. payrolls, euro edges up
* Markets positioned for weak reading of U.S. jobs market
* Median forecasts for 100,000 job losses
(Adds detail, updates prices)
By Naomi Tajitsu
LONDON, Sept 3 (Reuters) - The dollar struggled on Friday while the euro crept up before U.S. employment data which is expected to show more job losses and may fuel dollar selling but also heighten risk aversion.
Reflecting low appetite for risk due to worries about a slowdown in the U.S. and global economies, the yen was locked near a 15-year high against the dollar and the Swiss franc hovered within range of a record peak against the euro.
Data due at 1230 GMT is expected to show U.S. non-farm payrolls fell 100,000 in August, following a loss of 131,000 in July. Figures earlier in the week showed a surprising decrease in private sector jobs last month.
Currencies were little changed in early European trade, as investors were wary of taking on big positions ahead of the jobs data. Market participants said traders were short of dollars heading into the figures.
"If the figure does not provide a massive surprise to the upside, it will support the market's view that the Fed will not raise rates for a very long time," said Ulrich Leuchtmann, currency strategist at Commerzbank in Frankfurt.
He added that this would also raise speculation the Fed may implement more quantitative easing to boost the economy, which would be negative for the dollar.
Fed Chairman Ben Bernanke has said he is prepared to ease monetary policy further if the U.S. economic slowdown worsened.
Some in the market said a weak jobs reading may increase risk aversion, which could drive the euro and growth-linked currencies lower. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
For an FX Column on U.S. payrolls, click on [ID:nLDE6810ZE]
For a graphic on U.S. payrolls: r.reuters.com/bup98n ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
By 0926 GMT, the euro EUR= was little changed on the day at $1.2835, hovering near a two-week high around $1.2855 hit earlier in the week. Traders said the single currency's upside was capped by offers from semi-official European names.
Stop-loss orders seen at $1.2850 were limiting euro moves, while option expiries later in the day were littered in the $1.2800-$1.2900 region.
DOLLAR/YEN UPSIDE RISK?
The dollar .DXY was a touch lower on the day against a basket of currencies at 82.363.
The U.S. currency JPY= inched up to 84.40 yen, but hovered in range of a 15-year low of 83.58 yen hit late last month.
"There are said to be some stop-losses and option triggers around 83.50. So it could get ugly if the dollar/yen hits that level after the payroll data," said Teppei Ino, an analyst at Mitsubishi-Tokyo UFJ Bank in Tokyo.
The euro rose to 0.3 percent to 1.3030, but it stayed in range of an all-time low of 1.2850 earlier this week. The dollar CHF= was at 1.0150 francs, up 0.2 percent.
Investors often favour the low-yielding yen and Swiss franc when they want to avoid losses rather than seek higher returns.
The U.S. dollar CAD=D4 was slightly higher at C$1.0544, recovering from the day's low C$1.0519 hit after Russia's central bank said will soon be ready to invest its currency reserves in Canadian dollars. [ID:nLDE682062]
Traders have cited growing demand for short-dated options to buy dollar/yen this week, suggesting investors are keen to protect their short dollar positions against sudden bounces even though they see the greenback staying weak. [ID:nLDE67P1LQ]
As a result, options traders said risk reversals, the premium required to hold a put or a call in a currency, are skewed towards yen puts in the one-week tenor at around 0.6, shifting from 1.0 in favour of yen calls a week ago.
Investors have become cautious about bidding the yen too much after Japanese ministers said they could take action -- normally a code word for intervention -- to stem yen strength.
(Graphic by Scott Barber, additional reporting by Tokyo Forex Team, editing by Nigel Stephenson)