* 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 crisis.
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 survey.
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, however.
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 bets.
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.
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