* Euro seen pressured by widening sovereign spreads
* Hefty sovereign funding schedule weigh on euro
* Specs raise bets vs dollar to 4-month peak
* Robust economic data schedule could sway sentiment
(Recasts; updates prices, adds quotes, background)
By Julie Haviv
NEW YORK, Feb 11 (Reuters) - The U.S. dollar is destined to continue gaining against the euro next week as the single currency enters a period filled with obstacles, from widening peripheral sovereign bond spreads to a hefty funding schedule and an abundance of key economic data.
While the euro hit a three-week low against the dollar on Friday and breached a widely perceived pivotal level of $1.35, it ended the week nearly unchanged. Technical analysts eyed a close below its 100-day moving average at $1.3542, for the first time since Jan. 17, which would indicate the single euro zone currency should see further downside.
"An abundance of factors should work against the euro next week," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.
Euro zone debt markets became increasingly unsettled in recent days as Portuguese 10-year bond yields reached record highs, sparking fresh concerns about funding costs in peripheral euro zone economies.
"Concerns about Europe's debt problems have moved back to the forefront and should cause the dollar to appreciate gradually," he said.
Uncertainty surrounding the European Central Bank's policy should also weigh on the euro. Bundesbank chief Axel Weber, a known policy hawk, will not succeed Jean-Claude Trichet as president of the ECB, according to reports this week, adding to doubts that euro zone rates would rise in the near future.
"We see the euro as entering a more uncertain period ahead of the euro zone leaders' summit in mid-March and the heavier sovereign funding schedule for Portugal and Spain in the coming months," said Vassili Serebriakov, currency strategist at Wells Fargo in New York.
The euro next week could break through the technical support level of $1.35 and trade in the mid- to lower-$1.34 range, Esiner said.
Economic data is plentiful next week and many euro-area economies will release their preliminary estimates of fourth quarter GDP growth.
Part the dollar's strength this past week could be attributed to short-covering and data indicates more upside potential.
The value of currency speculators' bets against the U.S. dollar rose to its highest level since October, Commodity Futures Trading Commission data showed on Friday, the fourth straight weekly increase. [ID:nN11301566]
In the U.S., the economic calendar is full of important indicators with an emphasis on inflation, manufacturing activity and retail sales.
The dollar has smartly benefited from a spate of U.S. economic data reflecting a recovery well under way and most strategists are looking for more outperformance on the dollar.
In late afternoon New York trading, the euro was down 0.3
percent to trade at $1.3547
Regular sovereign debt auction activity will come to the forefront again next week, with some 17-21 billion euros worth of European government bond supply out of Italy, Germany, Spain, and France expected.
The euro briefly pared losses on Friday after Egyptian President Hosni Mubarak stepped down and handed power over to the Supreme Council of the Armed Forces. For the latest stories on Egypt, see [ID:nLDE71327H]
"This is probably a beginning rather than an end to the Middle East turmoil and its consequences could cause uprisings in other Arab nations," Commonwealth's Esiner said.
The dollar's outperperformance against the yen has been stronger than the euro. The greenback, which gained versus the yen for eight straight sessions, is on track for a weekly gain of 1.5 percent, its best performance in more than a month.
The dollar touched its highest level in a month at 83.68
yen
(Additional reporting by Gertrude Chavez-Dreyfuss and Steven C. Johnson, Editing by Chizu Nomiyama)