* Euro off lows on German ZEW, but debt worries remain
* Euro vulnerable as euro zone finance ministers meet
* U.S. yields support dollar, hits 6-week high vs yen
* But comments from Fed's Dudley tarnish dollar's shine
By Jessica Mortimer
LONDON, Nov 16 (Reuters) - The euro came off a near seven- week low against the dollar on Tuesday, helped by above-forecast German data, and as investors waited to see whether euro zone ministers could agree a solution to Ireland's debt problems.
Analysts said the euro may enjoy a boost if the finance ministers meeting in Brussels reach a deal, which would temper concerns the debt crisis could spread to Portugal and suck in bigger states.
Ireland has so far insisted banks may need help but the state does not.
Gains for the euro, which has been under pressure in recent days as anxiety over Irish finances has increased, were expected to be limited with investors mindful of the severity of the debt problems facing the euro zone's periphery.
"The worst case scenario is contagion risk and it might give the euro a short-term boost if Ireland were to accept some kind of bailout, although we would still be looking at a downside bias for euro/dollar," said Jeremy Stretch head of currency strategy at CIBC.
The euro firmed after a survey by think tank ZEW showed German analyst and investor sentiment rose more than expected in November.
It was also helped by comments from U.S. Federal Reserve officials which pulled the dollar off its highs.
New York Fed President William Dudley said conditions for an exit from U.S. monetary easing could be "years away", while Fed vice chairwoman Janet Yellen also defended the Fed's recently agreed bond purchase plan.
But U.S. bond yields stayed close to a three-month high near 2.97 percent hit on Monday, increasing the allure of dollar assets and helping lift the dollar to a six-week high against the low-yielding yen.
The euro was steady at $1.3581, off an earlier low of $1.3560, its weakest since late September. This took it just below its 55-day moving average, now at $1.3567, and the top of the cloud on daily Ichimoku charts at $1.3565.
Downside targets included $1.3463, a 50 percent retracement of the euro's September-November rally, and $1.3364, a 38.2 percent retracement of its June-November rally.
The dollar index, which measures the dollar against a basket of currencies, rose 0.3 to 78.740, off an earlier high of 78.761, its strongest since Oct. 1.
The dollar rose to a six-week high of 83.33 yen as the gap between U.S. and Japanese bond yields moved further in the dollar's favour. Traders also said there was talk of demand from Asian central banks.
The dollar was above its 55-day moving average, now at 82.83 yen and offering support, and broke through resistance on daily Ichimoku charts at 83.17 yen, the bottom of the cloud. The top of the cloud was at 84.13 yen.
EURO VULNERABLE
Positioning data showed speculators cut long euro positions significantly and cut short dollar positions. Traders said leveraged funds had flipped long euro/dollar positions, suggesting year-end position adjustment may favour the dollar.
"Any bounce in euro/dollar will be seen as a selling opportunity in the current environment," said Niels Christensen, currency strategist at Nordea in Copenhagen, adding that the euro would stay weak as long as uncertainty remained over how Ireland's debt problems would be resolved.