* Euro rises over 1 pct against dollar, yen * ECB head says will do whatever needed to save euro * Analysts still skeptical of euro rallies NEW YORK, July 26 (Reuters) - The euro soared to a two-week high against the dollar on Thursday, bolstered by a pledge from European Central Bank chief Mario Draghi that the bank would do whatever it takes to preserve the single currency. The euro was also lifted by stronger risk appetite after a report showed the number of Americans filing new claims for jobless benefits fell last week to near a four-year low, a hopeful sign for a labor market that has shown signs of weakness. Data showing contracts to buy previously owned U.S. homes unexpectedly fell in June as fewer properties came on the market failed to stem demand for risk. But all eyes were on Draghi who pledged, at a conference in London, to do whatever was necessary to protect the euro zone from collapse, including fighting unreasonably high government borrowing costs for countries such as Spain and Italy. "In a heavily biased market, it only takes a little bit of news of the opposite sentiment to provoke quick moves," said Christopher Vecchio, currency analyst at DailyFX. The euro rose to a two-week high of $1.2329, using Reuters data, well above a session low of $1.2116 touched earlier in the global trading day before Draghi's comments. It was the euro's best one-day performance since June 29. The euro was last up 1.1 percent at $1.2292. Better investor appetite to take on risk dented the safe-haven U.S. dollar, which fell to a two week low against the Swiss franc and lost more than 1 percent against both the New Zealand and Australian dollars. The euro also gained more than 1 percent against the Japanese yen to 96.17 yen. But analysts were skeptical the euro's gains would be sustained given worries about the possibility of Spain applying for a sovereign bailout or Greece leaving the monetary union. Greece has scraped together a plan to save nearly 12 billion euros over the next two years in an increasingly desperate effort to convince visiting EU and IMF inspectors it deserves to be saved rather than pushed out of the euro zone. . Yet, the biggest U.S. prime money market funds reduced their euro zone exposure to the lowest level since 2006 as fears about Spain requiring a full-blown bailout intensified, Fitch Ratings said in a report on Wednesday.. GAINS OVERDONE Analysts said there was little new or of substance in recent comments by policymakers and they expected traders to eventually sell the euro into any rally. They said the past two days' gains may have been overdone and the euro could re-test recent lows and target the psychologically important $1.20 level followed by 2010's low around $1.1875. "The only thing that could change the downtrend in the euro is if the Fed launched further quantitative easing or some other additional policy measures. Otherwise it's all about what happens in the euro zone," said Richard Falkenhall, currency strategist at SEB in Stockholm. Any hints at further quantitative easing at a U.S. Federal Reserve policy meeting next week could bolster the euro, as asset buying by the central bank would increase the supply of dollars in the market and weigh on the greenback. Speculation the Fed may adopt monetary easing steps could grow louder if U.S. second-quarter gross domestic product data due on Friday is weak, although most expect the central bank to hold back for now. New orders for a range of long-lasting U.S. manufactured goods fell in June and a gauge of planned business spending plans dropped, pointing to a slowdown in factory activity, a report showed on Thursday. "The slow accumulation of negative data will eventually force the Fed to act," said Joseph Trevisani, chief market strategist at Worldwide Markets, in Woodcliff Lake, New Jersey. "Today's mixed durable goods orders, with the headline result better than expected and the ex-transportation worse, does not change the economic slide toward recession."