* Uncertainty on Greece deal keeps euro shackled
* Weak German economic sentiment highlights spreading pain
* Lump sum transfer plan idea for Greece supports euro
* Euro gets support from 90-day moving average, cloud bottom
By Hideyuki Sano
TOKYO, Nov 14 The euro hovered near a two-month
low on Wednesday, hurt by uncertainty over Greece and weak
German economic sentiment data that highlighted the growing pain
in stronger European economies from the region's protracted debt
The euro edged up 0.2 percent to $1.2722, but was
still not too far from a two-month low of $1.2661 set on
Tuesday, when the euro slipped on a weak German ZEW sentiment
Support for the euro lies at its 90-day moving average near
$1.2667. The single currency has more support on the Ichimoku
chart near $1.2653, the bottom of the daily cloud.
But a break below the Ichimoku support would be considered a
major bear signal that could lead to a test of the 50 percent
retracement of its July-September rally at about $1.2608.
Hopes that international lenders may be getting close to
disbursing aid to Athens have lent some support to the euro,
A German newspaper said Germany wants to bundle Greek aid
into a single payment of more than 44 billion euros and German
Finance Minister Wolfgang Schaeuble later also said such an idea
was under consideration.
Still, that cannot happen until its lenders reach a broader
agreement, and the International Monetary Fund and euro zone
policymakers remain at odds over a long-term target to bring
Greece's debt down and the IMF's push for the euro zone to take
further losses on Greek debt.
"For the moment, the market's focus is on whether they can
decide on a deal for Greece next week," said Teppei Ino,
currency analyst at the Bank of Tokyo-Mitsubishi UFJ.
Another meeting of the 17-nation Eurogroup is due to take
place on Nov. 20 but officials said more negotiations could be
required the week after that to nail down a new deal.
Traders are likely to continue to look for opportunities to
sell the euro as long as it stays below $1.2880, said a trader
for a Japanese brokerage house in Tokyo.
In the near term, however, the euro could see a bounce if it
breaks above $1.2740, the trader said, adding that such a rise
could prompt short-term speculators to unwind their euro bearish
Against the yen, the euro edged up 0.3 percent to 101.14 yen
, with the single currency getting some reprieve after
having hit a one-month low of 100.33 yen on Tuesday.
The euro's woes lent support to the dollar index, which
measures the greenback's value against a basket of major
currencies. The dollar index stood at 81.022, near a
two-month high of 81.241 set on Tuesday.
The dollar, whose huge liquidity makes it a safe haven asset
for investors, was also supported by concerns about the U.S.
fiscal cliff - looming budget cuts and tax increases that
threaten to tip the U.S. economy into recession if Congress
cannot agree on a deal by the end of the year.
Such worries may continue to weigh on the euro against the
dollar, said Rob Ryan, a strategist for RBS in Singapore.
"I can still see it (the euro) continue to grind lower,
particularly if we have a risk-off moment if we don't see
progress on the fiscal cliff," Ryan said.
"We probably still have a little further downside in the
euro," he said.
The dollar remained stuck within a well-trodden range
against the yen and traded at 79.51 yen, up 0.2 percent
from late U.S. trade on Tuesday.