The euro failed to sustain early gains against the dollar on Wednesday as traders booked profits from a rally in the single European currency and focus shifted away from Greece's fiscal woes. The yen, meanwhile, fell broadly as concerns about sovereign risks eased.
Having posted its biggest one-day percentage gain versus the dollar since July on Tuesday, the euro's rally ran out of steam even as Greece won a one-month reprieve to take steps to put its fiscal house in order. European finance ministers on Tuesday gave Greece until March 16 to show its deficit reduction plan was being rolled out effectively. They set the same deadline for themselves to decide what should happen next.
"It is possible that an immediate crisis for EMU has been side-stepped," said Jane Foley, research director at Forex.com. The euro has fallen nearly 10 percent against the dollar since December on concerns about Greece's fiscal health and other eurozone peripheral countries, and currency speculators raised net euro short positions to a record high last week.
By 1220 GMT, the euro fell 0.2 percent to $1.3736. Earlier, it had climbed to around $1.3790, its highest since February 11. Sterling also shed early gains against the dollar after data showed UK jobless claims unexpectedly jumped. The data offset Bank of England meeting minutes which showed no members voted against a pause in the central bank's asset buying programme, contrary to market speculation dissenters had called for more easing.
Sterling was down 0.1 percent on the day at $1.5768, off from the day's high of $1.5816. Market participants will look to the Federal Reserve's January policy meeting minutes due out at 1900 GMT for insights into the US central bank's exit strategy.
The dollar index, which tracks the greenback versus a basket of six other currencies, rose 0.1 percent to 79.816 after falling to 79.559, its lowest since February 4. The dollar rose to 90.92 yen, its highest since February 4, according to Reuters data. Against the yen, the euro rose 0.4 percent to 124.68 yen, while the pound gained 0.7 percent and the Australian dollar climbed 0.8 percent.
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