* Euro & USD both weighed by dismal European, US data
* ECB, Fed seen pressured to do more
* Aussie eyes RBA rate decision, no move expected
By Ian Chua
SYDNEY, July 3 (Reuters) - Investors made short shrift of both the euro and U.S. dollar on Tuesday after a batch of dismal data from Europe to the United States raised expectations for more action from central banks in both regions.
That resulted in a yen that outperformed most of its major counterparts, and helped underpin high-beta currencies like the Australian dollar.
The greenback bought 79.45 yen, having fallen from Monday's high around 79.98, while the euro fetched 99.97 yen , well down from recent highs above 101.00.
The dollar managed to outperform the single currency, which slipped to $1.2579 from highs near $1.2700. The fall has cut by about half the euro's 1.7 percent rally on Friday after European leaders took a step forward to resolving the region's debt crisis.
As euphoria over the EU deal faded, investors were hit by a wave of bad economic news on Monday, culminating in a closely watched report that showed U.S. manufacturing contracting for the first time in nearly three years.
"The data out of the U.S. is softening, which may mean that the market starts pricing in an increasing likelihood for QE3, resulting in USD weakness," analysts at BNP Paribas wrote in a note.
Some of the most grim data came from the euro zone, bolstering the case as well for the European Central Bank (ECB) to cut interest rates at its policy meeting on Thursday.
"The ECB Governing Council may have little choice but to implement a range of policy tools to shore up the ailing economy as the region faces a growing threat for a prolonged recession," said David Song, currency analyst at DailyFX.
"ECB President Mario Draghi may see scope to implement a zero-interest rate policy as the governments operating under the fixed-exchange rate system become increasingly reliant on monetary support."
With markets pricing in more policy action by both the ECB and Fed, the euro and dollar are likely to stay under pressure.
In contrast, Australia's central bank is widely expected to keep its 3.5 percent cash rate steady on Tuesday, following back-to-back cuts.
Traders said this should help support the Aussie. It was at $1.0248, still not far off a fresh two-month high of $1.0279 set overnight. Immediate resistance is seen at $1.0289, the 78.6 percent retracement of its April 27-June 1 fall.
The Aussie reached a four-month high on the euro on Monday, which plumbed A$1.2255, a whisker from the March 2 trough of A$1.2254. A breach there would take the euro to lows not seen since Feb. 20.
The Reserve Bank of Australia will announce its rate decision at 0430 GMT.