Dollar falls versus yen in Asia

The euro rose on Tuesday, supported by hopes for a Greek debt restructuring deal that would help the country avoid a disorderly default, possibly setting itself up for a test of a key chart level. The dollar extended its recent losses versus the yen and hit a three-month low, remaining under pressure after the US Federal Reserve said last week it was likely to keep interest rates near zero at least until late 2014.
The euro got a lift after Greek Prime Minister Lucas Papademos said negotiators had made "significant progress" in talks to strike a restructuring deal for Greek government debt, with the aim of having a definitive agreement by the end of this week. The single currency rose 0.3 percent to $1.3180, edging back toward a six-week high of $1.3235 hit last week on trading platform EBS.
The euro faces resistance at that level and also near $1.3244, the 38.2 percent retracement of the euro's October to January slide. "If we do get a break of that $1.3244 retracement level, then I think maybe we get a more significant short-covering," said Rob Ryan, FX strategist for BNP Paribas in Singapore.
Ryan, however, said such a rise would probably require Greece actually clinching a debt restructuring deal, adding that the euro could rise towards $1.3500 if that resistance is breached. A rise in regional equities weighed on the safe haven dollar and helped lend support to the euro, traders said, adding that there was also talk of the potential for dollar-selling related to month-end portfolio adjustments.
"Month-end dollar selling seems to be the theme for the day," said a trader for a European bank in Singapore, adding that while the comments from Papademos gave the euro a lift, the Greek debt talks have yet to be resolved. The dollar fell 0.3 percent against a basket of major currencies to 78.912, underscoring the greenback's broad decline on Tuesday. Against the yen, the dollar hit a three-month low of 76.175 yen on trading platform EBS at one point, well below last week's high of 78.288 yen, with traders saying the dollar dipped as some market players trimmed their long positions. That brought the dollar closer to a record low of 75.311 yen hit in late October, a drop that led to massive yen-selling intervention by Japanese authorities. The dollar last stood at 76.32 yen, steady from late US trade on Monday.