* Euro faces short-term resistance near $1.2184
* Dollar/yen dips, Japan importers may lend support
* Dollar gains may be limited before Fed meeting next week
SINGAPORE, July 26 (Reuters) - The euro inched lower on Thursday giving back some of its gains from a short-covering rally the previous day, its outlook clouded by persistent worries about Spain's debt woes.
The euro rose on Wednesday after European Central Bank Governing Council member Ewald Nowotny said he could see grounds for giving theeuro zone bailout fund a banking license that would increase its crisis-fighting firepower.
But ECB President Mario Draghi has poured cold water on the idea, while legal problems could also prevent the central bank allowing its European Stability Mechanism rescue fund to tap liquidity operations.
"The fact is the ECB is still quite divided on the issue of giving the ESM a banking license," said Mitul Kotecha, head of global foreign exchange strategy for Credit Agricole in Hong Kong.
"I think if anything, any bounce that this has induced would be short-lived. I don't see the euro sustaining gains."
The euro dipped 0.2 percent to $1.2137, pulling away from the previous day's intraday high near $1.2170.
The single currency is likely to face additional resistance near $1.2184, where the tenkan line on the daily Ichimoku chart now lies, said a trader for a major Japanese bank in Tokyo. Ichimoku charts are a popular technical analysis tool.
That level also marks the 50 percent retracement of the euro's drop from a July 19 peak of $1.2325 down to a two-year low of $1.2042 hit on trading platform EBS earlier this week.
Sentiment toward the euro remains bearish given spiralling Spanish borrowing costs that have fuelled concerns the country will need a full sovereign bailout.
The Spanish 10-year government bond yield fell to roughly 7.40 percent on Wednesday, but is still at levels that are deemed as unsustainable, and is not far away from a euro era high of about 7.75 percent.
The euro has support at its 200-month moving average roughly around $1.2025. A break below that level and the psychologically important $1.20 level could open up a test of the euro's June 2010 low near $1.1875.
FED MEETING
While the euro may struggle to head higher, the its downside against the dollar may be limited ahead of the U.S. Federal Reserve's policy meeting next week, said Credit Agricole's Kotecha.
"I think the dollar will find it difficult to make gains, given there is growing speculation that the Fed might take some action next week," Kotecha said.
The dollar index, which measures the greenback's value against a basket of major currencies, stood at 83.66, not too far from a two-year high of 84.10 struck earlier in the week.
Against the yen, the dollar held steady at 78.13 yen, hovering near a seven-week low of 77.94 yen set this week.
Dollar demand for Japanese importers may emerge at levels below 78.00 yen and help support the dollar, said a trader for a major Japanese bank in Tokyo.
In addition, the dollar has been supported recently by wariness about potential Japanese yen-selling intervention, with some market players saying that a drop below 78.00 yen might intensify market jitters.
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