The euro rose 0.1 percent to $1.2995 after having fallen to as low as $1.2945 on Wednesday on trading platform EBS, the euro's lowest level since Jan. 11. The next major support is found at the year's low, on Jan. 10, of $1.2860. The euro inched up 0.1 percent against the yen to 101.45 yen . On Wednesday, the euro had dipped to as low as 101.10 yen, nearing a 10-year low of 100.77 yen hit in October. The single currency has come under pressure this week after last Friday's European Union summit, seen as critical to reach a solution to rein in the debt crisis, failed to restore investor confidence. With the European Central Bank sounding reluctant about stepping up its bond-buying programme, any bounce in the euro is likely to be limited in the near-term, said Rob Ryan, FX strategist at BNP Paribas in Singapore. "We need something to get us through the next six to 12 months," Ryan said. The euro area faces the next potential crunch point in mid-January when Italy has to start issuing tens of billions of euros in bonds towards a 2012 total of 340 billion euros needed to roll over maturing debt. Italy managed to find enough buyers for its debt auctions on Wednesday, but investors focused on the high yields that Rome was forced to pay -- a level seen as unsustainable. At auction, the 6.47 percent yield on Italy's five-year bond was the highest since the euro was launched in 1999. In Ryan's view, the question is who will buy euro zone sovereign debt at a time when financial institutions are deleveraging and trimming their assets. "It means somebody has to step in to buy those bonds. If the ECB is not going to do it, it all looks pretty ugly for not just the euro but for everything else as well," Ryan said. ECB policymaker Jens Weidmann delivered a blow to hopes of more decisive ECB intervention to quell the euro zone crisis, saying this week that his peers at the bank were growing sceptical of its bond-buy programme, which he openly opposes. Going into the end of December, the euro may bounce to around $1.32 if more details emerge about countries making contributions to the International Monetary Fund to help contain the euro zone's debt crisis, said BNP Paribas' Ryan. "But still I think there's a lot of people lining up to sell (the euro)," he said. A Fitch downgrade on Wednesday of five major European financial groups, including France's Credit Agricole to A-plus from AA-negative, added to the already euro-negative sentiment. This comes on top of the prospect of further cuts by Standard & Poor's, which warned earlier this month it could downgrade the ratings of 15 of the 17 euro zone members. The Australian dollar dipped 0.1 percent to $0.9897 , showing limited reaction to a preliminary private purchasing managers' survey showing China's factory output shrank again in December after new orders fell. DXY NEAR YEAR'S HIGH The dollar index last stood at 80.507, having hit an 11-month high of 80.73 on Wednesday and nearing the 2011 peak of 81.313. "I certainly see U.S strength continuing, the US economy is accelerating, we'll probably get a validation of that with US industrial output (later on Thursday)," said Joseph Capurso, a strategist at Commonwealth Bank of Australia "I can see the US dollar keep trending higher while the euro flounders." The Swiss franc dipped to a 10-month low of 0.9540 to the dollar earlier on Thursday, ahead of a central bank policy meeting later in the day. The Swiss National Bank is expected to stay on hold this week, but analysts suspect it is only a matter of time before it shifts the cap on its currency. The dollar held steady against the yen at 78.06 yen, having pulled away from last week's low near 77.13 yen over the past few days. Traders said the dollar was supported against the yen on Thursday due to dollar buying by Japanese importers.