* Markets expect ECB to take QE steps; Greece election also weighs

* USD edges up after Monday's U.S. holiday

* China 4th quarter GDP report awaited

By Lisa Twaronite

TOKYO, Jan 20 (Reuters) - The euro faced pressure on Tuesday as investors positioned for possible easing steps by the European Central Bank as early as this week, while the dollar edged up on the yen after a U.S. holiday.

U.S. markets were closed on Monday for the Martin Luther King holiday.

Sources have told Reuters the ECB may adopt a hybrid approach that would include buying debt and sharing some of the risk across the euro zone, while national central banks make separate purchases of their own. The programme might be limited in size to 500 billion euros ($579.95 billion).

"We expect the ECB to announce the expansion of its asset purchase program to include European government bonds at its 22 January meeting and we recommend staying short EUR/USD as well as short EUR/GBP into the meeting," strategists at Barclays said in a note to clients.

A snap election in Sunday, with the anti-bailout party Syriza leading in the polls, also added to euro zone uncertainty and to pressure on the European unit.

The euro dropped last week after the Swiss National Bank stunned foreign exchange markets by abandoning its three-year-old currency pledge to cap its currency.

The euro was trading at $1.1594, down 0.1 percent on the day and not far from Friday's nadir of $1.14595, its lowest level in 11 years.

Against the yen, the greenback added about 0.2 percent to 117.75.

Later in the Asian session, China is scheduled to release its fourth-quarter growth data. Weaker-than-expected figures would likely sap investors' risk sentiment and could give the safe-haven Japanese currency a lift, to the dollar's detriment.

The Bank of Japan will also begin a two-day policy meeting on Tuesday. The central bank is set to cut its core consumer inflation for next fiscal year below 1.5 percent from 1.7 percent projected in October, sources familiar with the bank's thinking said.

With the BOJ's massive asset purchases already pushing Japanese government bond yields into negative territory at the shorter end of the curve, many board members want to hold off on expanding quantitative easing steps, but surprise action cannot be ruled out.

($1 = 0.8621 euros) (Editing by Eric Meijer)