Early trade in New York: Euro rallies but gains seen short-lived

The euro rebounded on Wednesday from a four-month low against the dollar in the previous session as worries about Cyprus eased, with some investors convinced the debt-plagued country can hammer out a deal to avert default. Europe's common currency, however, remained vulnerable to uncertainty about Cyprus' bailout and the potential risk that bank deposits in other euro zone countries, like Spain and Italy, could be taxed as a pre-condition for future financial aid.
That should fan broader concerns about the euro zone as a whole. The euro was last up 0.6 percent at $1.2952, recovering from Tuesday's four-month low of $1.2843 and holding above a key chart support level at the 200-day moving average around $1.2873. The dollar was up 0.4 percent at 95.50 yen, while the euro rose 0.9 percent to 123.70 yen.