The euro rose against the dollar on Wednesday on cautious optimism that eurozone leaders may reach a deal to ease Greece's debt problems, but gains were capped by concerns that the risks of contagion would persist.
Traders said the euro was bolstered by Asian sovereign demand early in the day, along with an easing in the government bond yields of weak, periphery eurozone nations, which squeezed their spreads versus safe-haven German Bunds.
Supporting the single currency were comments by French ministers on Wednesday that European leaders were less divided than the media was reporting and were likely to reach an accord at a summit on Thursday that will ease Greece's debt woes.
The euro traded at $1.4220, having risen around 0.6 percent on the day to a session high of $1.4239. The single currency was also supported as eurozone sources said the summit would be delayed slightly to allow time for a deal to be reached on the involvement of the private sector.
Analysts and traders remained concerned that a second Greek bailout may give only temporary relief to the euro.
The euro sat well above a four-month low near $1.3838 hit last week, with support near $1.4120, which roughly coincides with trendline support on hourly charts, and traders said it was propped up by Asian sovereign demand.
However, it struggled to extend gains beyond resistance around $1.4219, a 76.4 percent retracement of its recent drop to $1.4015 from $1.4282, while more obstacles loomed near $1.4300, around the 55-day and 100-day moving averages.
Some technical analysts pointed to the fact that the 55-day average will soon move below the 100-day average, a bearish signal that could see the euro target its 200-day average around $1.3914. Elsewhere, commodity-linked currencies were supported by better appetite for risk, with the New Zealand dollar trading at $0.8563, near a 30-year high of $0.8573 hit on Tuesday.
The Canadian dollar also hit a two-and-a-half month high of C$0.9466 per US dollar, helped by Chinese oil producer CNOOC Ltd saying it would buy Canada's Opti Canada Inc.
The dollar fell 0.2 percent against the yen to 78.93 yen, having backed off an intraday high near 79.30 yen.
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