NEW YORK: The euro edged up against the dollar Wednesday ahead of a crunch meeting between the German, French and Greek leaders over Greece's readiness to embrace a new bailout plan.
The dollar also got little support from the Federal Reserve, which kept its ultra-low interest rates unchanged, as expected, after a policy review, but gave a more downbeat forecast for the economy next year.
The euro was trading at $1.3746 at 2200 GMT, up from $1.3697 late Tuesday, following the optimism on share markets that Greece could be kept on track with the rescue and reform program and not head toward a massive default on its debts.
The euro traded flat against the Japanese yen, at 107.28 yen, while the dollar slipped to 78.06 yen from 78.34.
Late trading was cautious as German Chancellor Angela Merkel, French President Nicolas Sarkozy and IMF director Christine Lagarde prepared to confront Greek Prime Minister George Papandreou over his response to the rescue package agreed only one week ago.
"For us, it is actions that matter. We agreed a programme with Greece last week. And from the EU side, at least for Germany, we want to implement this programme," Merkel told reporters before flying to Cannes, France, where the leaders of the G20 were to meet beginning Thursday.
She and Sarkozy were expected to present an ultimatum to Papandreou, who shocked markets on Monday by announcing that he would submit Greece's participation in the rescue plan, with its difficult austerity provisions, to a public referendum.
That sent the euro falling from the $1.42 level reached on Thursday to as low as $1.36 on Tuesday.
But traders were looking at the policies of the US and European central banks as well. On Wednesday the US Federal Reserve kept its easy money policies in place and said the threat of inflation had declined.
On Thursday the European Central Bank will also update its policies, with some speculating it could actually cut interest rates amid fears the eurozone was slowing toward recession.
"We may see the ECB show an increased willingness to scale back the rate hikes from earlier this year," said David Song of DailyFX.
"However, as former Bank of Italy President Mario Draghi takes the helm, the central bank may merely reiterate the policy statement from the previous month, and market participants may overlook the rate decision as the developments surrounding the Greek referendum comes into focus."
The dollar meanwhile fell to 0.8837 Swiss francs from 0.8869 francs.
The British pound edge higher, to $1.5945 from $1.5950.
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