The dollar struggled on Friday while the euro and other higher-risk currencies were off the day's highs as investors braced for weak U.S. jobs data that may fuel more risk aversion.

Reflecting simmering 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 near 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 the previous month. 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 crucial jobs data. Market participants said traders were short of the dollar 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 said last week he was 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.

By 0741 GMT, the euro was little changed on the day at $1.2820, hovering near a two-week high around $1.2855 hit earlier in the week.

The next target for the euro was around $1.2873 -- a 38.2 percent Fibonacci retracement of its fall from its August peak around $1.3334 to its August low near $1.2588. The target after that would be $1.2923, touched on August 18.

DOLLAR/YEN UPSIDE RISK?

Against a basket of currencies, the dollar .DXY was a touch lower on the day at 82.381.

The U.S. currency traded flat at 84.30 yen, hovering 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 Swiss franc was well supported, with the euro at 1.300 francs after the single currency hit an all-time low of 1.2850 earlier this week. The dollar was at 1.0137 francs.

Investors tend to favor the low-yielding yen and Swiss franc when they want to avoid losses rather than seek higher returns.

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.

They 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 the yen's strength.

But many traders have doubts over whether Tokyo will step into the forex market given that Tokyo could have trouble convincing other G7 members about the need to intervene when they are calling on China to make the yuan more flexible to ease global imbalances.

(Graphic by Scott Barber, additional reporting by Tokyo Forex Team, editing by Nigel Stephenson)

China Ben Bernanke