Forex - Euro finds support on Greece deal hopes

Forexpros - The euro edged higher against the U.S. dollar and the yen on Tuesday, as markets eyed developments in Greece but the single currency was close to a record low against the Australian dollar after the Reserve Bank of Australia left rates unchanged in a surprise move earlier.

During European late morning trade, the euro inched higher against the U.S. dollar, with EUR/USD easing up 0.10% to hit 1.3142.

Sentiment on the euro remained supported by underlying expectations that Greek political leaders will come to an agreement on bailout terms and avoid a sovereign debt default.

Earlier Tuesday, President of the Eurogroup of finance ministers Jean-Claude Juncker said he was confident Greece would remain in the single currency bloc, provided that the country fulfilled its obligations to other bloc members.

Greek Prime Minister Lucas Papademos was due to hold talks with coalition leaders later Tuesday to discuss what conditions they are prepared to accept in exchange for a second bailout, after postponing talks on Monday and failing to finalize an agreement over the weekend.

A final agreement on Greece’s EUR130 billion bailout must be approved by February 15, in order to avert a default when a EUR14.5 billion bond repayment comes due on March 20.

The euro also edged higher against the pound, with EUR/GBP rising 0.14% to hit 0.8309.

In the U.K., a report by the British Retail Consortium showed that retail sales fell 0.3% on the year in January, after a 2.2% jump the previous month, as shoppers cut back on spending after heavy discounts boosted sales in the run up to Christmas.

The single currency was weaker against the yen and the Swiss franc, with EUR/JPY falling 0.79% to hit 99.98 and EUR/CHF slipping 0.12% to hit 1.2066.

A report earlier showed that the value of the Swiss National Bank's foreign currency reserves fell to CHF227.2 billion in January, from CHF254.3 billion the previous month.

Elsewhere, the euro continued to struggle close to record lows against the Australian and New Zealand dollars, with EUR/AUD shedding 0.54% to hit 1.2174 and EUR/NZD losing 0.17% to hit 1.5718.

The Aussie rallied earlier in the session after the RBA unexpectedly left its benchmark interest rate unchanged at 4.5%, but the bank left the door open to further monetary easing if domestic demand weakened further.

Commenting on the decision, RBA Governor Glenn Stevens said “financial market sentiment, though remaining skittish, has generally improved since early December.”

The euro pushed higher against the Canadian dollar, with EUR/CAD rising 0.12% to hit 1.3092.

Later Tuesday, Germany was to publish official data on industrial production, while Federal Reserve Chairman Ben Bernanke was due to testify on the economic outlook and federal budget situation before the Senate Budget Committee in Washington.