* Euro recovers, but seen vulnerable
* Greek debt default concerns underline euro zone problems
* Canadian CPI jumps, pushing CAD to 1-week high vs USD
By Naomi Tajitsu
LONDON, April 19 (Reuters) - The euro rose against the dollar on Tuesday as it recovered from the previous day's selloff, but debt problems in the euro zone continued to weigh on the single currency, keeping it vulnerable to more losses.
The euro
The single currency recovered some of Monday's losses, when risky assets were hit by growing talk Greece will have to restructure its mountain of debt and by Standard & Poor's threat to cut the United States' AAA credit rating.
But traders said the euro could encounter more selling ahead of the Easter holidays. It may also be hemmed in by options expiries due on Tuesday at $1.4200 and $1.4300.
"The European debt crisis is in the market's focus again, and people are concerned there is no lasting solution. Meanwhile, even negative news in the U.S. isn't putting too much pressure on the dollar anymore," said Lutz Karpowitz, currency analyst at Commerzbank in Frankfurt.
Earlier, comments from a German Finance Ministry official that a Greek debt restructuring was inevitable caused the euro to pare some early gains but it then rebounded. [ID:nBAT006174] Athens has denied such a possibility.
The comment supported an Athens newspaper report which cited a European Commission official saying Greece has accepted it cannot avoid a restructuring. [ID:nLDE73I0D5]
Elsewhere, the Canadian dollar reversed its recent losses to
hit a one-week high versus the greenback
The data will add pressure on the Bank of Canada to resume raising interest rates. The U.S. dollar lost 0.7 percent to hit C$0.9574.
EURO VULNERABLE
The euro has pulled back sharply after it was unable to hold onto a 15-month high above $1.45 hit earlier this month.
Analysts said the possibility that a country which has received a debt bailout may still have to restructure its borrowing was likely to encourage more investors to exit long euro positions.
"We are now seeing a rapid reversal of fortune with the euro now ranked as the overall weakest currency across the system of models," BNP Paribas said in an FX quantitative strategy note.
"With euro bearish signals still being generated we expect further euro selling over the short term."
Positioning data from the Commodity and Futures Trading Commission on Friday showed net euro long positions at their highest since December 2007, leaving scope for a reversal. [IMM/FX]
Analysts said investors were wary of holding bets in favour of the euro over the upcoming four-day Easter holiday weekend, adding that that the single currency could encounter more losses if those positions are closed out.
The dollar <.DXY> slipped 0.4 percent on the day against a currency basket to 75.182.
Given that a majority of U.S. debt is owned by foreign investors, some analysts were surprised the S&P announcement failed to trigger lasting dollar selling. Some said the dollar's gains suggested investors were keen to lighten their heavy positioning in favour of the euro.
"The price action suggests the euro was getting pretty tired. It was definitely looking that way around $1.45," said Paul Mackel, director of currency strategy at HSBC.
He said there was a risk that the dollar could squeeze higher and for longer than investors currently think.
The U.S. currency