* Euro starts steady in Europe ahead of ECB decision
* Bank seen announcing 50 bln euros in bond-buying monthly
* Swiss franc also up ahead of decision (Updates after start of European trade, changes dateline from previous SYDNEY )
By Patrick Graham
LONDON, Jan 22 (Reuters) - The euro held fast more than a cent above 11-year lows ahead of a European Central Bank policy meeting on Thursday widely expected to embark on the outright money-printing the bank has steadfastly avoided, in contrast to its peers.
Traders and strategists at the major banks say an extended monthly bond-buying programme, outlined by Reuters and other news services on Wednesday, is fully priced-in to the euro.
That argues for a clearing out of many of the bets on the euro weakening against the dollar that have made money for investors over the past six months and the single currency rose almost a cent on Wednesday.
But traders also say the scale of conviction in the market that the euro is headed broadly lower over the next year means most will continue to sell into that sort of rally. It was largely unchanged in early deals in Europe at $1.1611.
"The market is convinced the euro will continue to fall, but (also) that the best strategy is to sell into rallies - given this intention, I struggle to see euro strength getting out of hand," Josh O'Byrne, a strategist with Citi in London, said.
"Short euro is still not as heavily positioned a trade as some people think."
The ramifications of ECB bond-buying are extensive and the run in has made for one of the most active and volatile weeks in major currency markets in years.
The Swiss franc, up almost 20 percent since the Swiss National Bank removed its cap on the currency against the euro last week, gained more than half a percent in early European trade, rising to 99.1 francs per euro.
"There is the suspicion that the SNB has been intervening intermittently (against the franc)," O'Byrne said. "But I think (in the context of the ECB) it might be reluctant to do so today and that may be helping the franc."
A euro zone source said on Wednesday the ECB's Executive Board has proposed a programme that would enable the bank to buy 50 billion euros ($58.05 billion) in bonds per month starting in March.
Since reaching an 11-year trough of $1.14595 on Friday, the euro has held in a relatively slim range. Whatever the outcome on Thursday, traders said there is sure to be plenty of volatility.
"Given extreme levels of positioning as revealed both anecdotally and in IMM data, we prefer to watch this from the sidelines," said Nick Parsons, global co-head of FX strategy at National Australia Bank.
"We've exited our short position, established at 1.2435, at 1.1555." (Additional reporting by Ian Chua in Sydney and Masayuki Kitano in Singapore; Editing by Alison Williams)