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* Domestic data mixed, RBA meeting looms
* Euro on defensive as ECB could ease this week
* AUD 10-yr futures hit 3-mth peak
By Gyles Beckford and Cecile Lefort
SYDNEY/WELLINGTON, Feb 3 (Reuters) - The Australian and New Zealand dollars bounced off lows against their U.S. counterpart on Monday in a week packed with event risk, and made a solid advance on a battered euro.
The Aussie
It showed resilience to mixed domestic data including a 2.9 percent fall in housing approvals in December, though they were still up 22 percent for the year.
Yet, home prices across Australia's major cities rose 1.2 percent last month, an encouraging sign for the Reserve Bank of Australia (RBA) which has been counting on home building to boost a slowing economy.
The rise in home prices is a reason why domestic inflation remains stubbornly firm and could force the central bank to close the door on further rate cuts.
A private gauge of Australian inflation rose marginally in January, putting the annual pace at 2.5 percent which is in the middle of the RBA's long-term target of 2 to 3 percent.
The RBA holds its first policy meeting of the year on Tuesday, and while no move in the record low 2.5 percent cash rate is expected, there is some risk of the central bank delivering a warning note on inflation.
For some analysts, the main risk is offshore.
"I expect the Aussie to remain on the backfoot this week," said Joseph Capurso, a strategist at Commonwealth Bank of Australia, seeing the RBA policy meeting as a non-event.
He forecast US dollar strength following the release of U.S. manufacturing and jobs data.
Strong resistance was found at $0.8825 with support near $0.8740.
In Europe, talk of a possible policy easing weighed on the single currency, pinning it at A$1.5384
Likewise against the kiwi, the euro fell to NZ$1.6609
The New Zealand dollar was firmer at $0.8115
The currency has been under pressure through a combination of risk aversion following the emerging market concerns, and some disappointment that the country's central bank did not raise interest rates last week.
The Reserve Bank of New Zealand (RBNZ) is seen as a near certainty to start raising rates at its March 13 meeting. But that has not stopped the kiwi being battered nearly 4 percent lower in the past two weeks.
"We expect NZ dollar weakness could continue during the next few weeks and possibly until March 13, when an RBNZ hike should mark a turnaround," said Westpac senior strategist Imre Speizer.
He said the kiwi might fall as far as $0.7900 if it sustains a break through $0.8085. Near term resistance is at $0.8130.
"By mid-2014 New Zealand's strong fundamentals and increasing interest rate differentials should push NZD/USD towards $0.8550."
A Reuters poll has 16 of 17 analysts expecting a March rate rise, while financial market pricing implies a 100 percent chance at that review and 128 basis points of tightening over the next 12 months.
The main data in a holiday shortened week is fourth quarter wages and jobs numbers on Wednesday, which is expected to see a modest lift in employment resulting in a slight drop in the jobless rate.
New Zealand government bonds
Australian government bond futures reversed earlier gains with the three-year bond contract
The 10-year contract
(Editing by Shri Navaratnam)
((Cecile.Lefort@thomsonreuters.com)(+61 2 9373-1234)(Reuters Messaging: cecile.lefort.thomsonreuters@reuters.net))
Keywords: MARKETS AUSTRALIA/FOREX