The euro struggled to maintain gains in Asia on Wednesday, as short-covering after recent lows was tempered by caution ahead of Greek debt talks and a Portuguese bond auction later in the session. The single currency rose 0.2 percent to $1.2775, pulling well away from a 17-month low around $1.2624 set on Friday, but easing from a session high of $1.2787.
Resistance was cited near the pair's 14-day moving average of $1.2807 as well as Tuesday's high on the EBS trading platform of $1.2810, with stop-loss orders said to lie at $1.2815. Further resistance was seen around $1.2850, the topside of a downtrend channel from November. A move through Friday's $1.2879 high would signal that a deeper correction is unfolding.
The euro was steady at 97.82 yen, off a session peak of 98.05 yen but moving away from an 11-year nadir of 97.04 yen marked on EBS on Monday, after Standard & Poor's broad rating cuts of euro zone government debt on Friday and the EFSF rescue fund on Monday. Resistance was said to lie at Tuesday's high of 98.33 yen and at the 14-day moving average of 98.42 yen.
"The euro's move up is a short-term correction to recent excessive pessimism, but its medium-term continuation is questionable," said Kimihiko Tomita, head of foreign exchange for State Street Global Markets in Tokyo. Greece's debt swap talks with international creditors are also set to resume on Wednesday. The euro's better tone was the greenback's bane, with the dollar index falling 0.2 percent to 81.017, retreating from a 16-month peak of 81.784 hit on Friday. The US unit edged down against the yen to 76.68.
Improved sentiment also supported commodity currencies, though the Australian dollar was nearly flat at $1.0380 after rising as far as $1.0450 on Tuesday, its highest level in 11 weeks. Further resistance was seen at $1.0496, which would represent a 76.4 percent retracement of the decline from late October through late November. Against the Aussie, the British pound stabilised at 1.4764 after touching a 27-year low of 1.4702 on Tuesday.