The euro struggled to make much headway in Asia on Thursday and consolidated further ahead of an expected European Central Bank interest rate cut and a crucial EU leader summit that is to address the eurozone's two-year-old debt crisis. The euro hovered at $1.3401, roughly in the middle of its tight $1.3332-3486 range from the past week.
It nudged as high as $1.3428 after the Nikkei business daily said the G20 was preparing a $600 billion lending facility for the IMF to help Europe, but the effect faded after it was denied by G20 and IMF officials. The euro has gained 1.5 percent since it struck a seven-week trough of $1.3213 on November 25, but investors were wary of taking new bets ahead of the ECB's rate review, widely expected to see them cut by at least 25 basis points to 1 percent.
A senior spot trader for a major Japanese bank said it could fall and that stop loss offers looming at $1.3380 may come under pressure, exposing support at a trendline off the November 25 low coming in at $1.3355, where solid bids have been spotted recently. Further support was seen at $1.3213 and $1.3145 - November and October lows respectively.
Even more bullish analysts suggested that by the next week the euro may correct to $1.3729 or even as high as $1.3851, respectively 50 and 61.8-percent retracements of its decline in November. Traders said it was poised to easily recoup some modest losses sustained on Thursday due to disappointing Australian jobs figures and to pierce above formidable resistance at $1.0337 - the 61.8 percent retracement of its recent slide from $1.0753 to $0.9664 - a level that blocked the Aussie twice last week.
The Aussie dropped 0.4 percent to $1.0252, hurt by the employment data, but traders said it was still relatively resilient against the backdrop of softer Asian bourses. France and Germany will present a plan to amend the EU treaty to anchor stricter budget discipline, aimed at restoring market confidence and preventing the debt crisis spiralling out of control.
The euro was up 0.1 percent at 1.2387 Swiss francs. It rose to a one-month high of around 1.2443 francs after the Swiss finance minister said authorities could consider negative interest rate and capital control options to curb the franc's strength. The dollar declined 0.1 percent against a basket of currencies to 78.546 and it was stuck at 77.64 yen.
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