LONDON, Nov 17 (Reuters) - The euro traded near seven-week lows versus the dollar on Wednesday, hobbled by the lack of a clear solution to Ireland's debt crisis while high-yielding currencies suffered as risky trades were unwound.
Euro zone finance ministers agreed on Tuesday to lay the groundwork for bailing out Ireland's banking sector with the IMF, but Dublin has yet to decide whether to request the aid.
The uncertainty and risks it could spread to Portugal and other weak economies benefited the dollar. It added fuel to the short-covering rally that on Tuesday drove the greenback to a seven-week high against a basket of major currencies.
Ireland's finance minister said on Wednesday that talks with the European Union, European Central Bank and IMF will start on Thursday. [ID:nWLA8286] [ID:nLDE68T0MG]
"Investors are looking at all this euro zone uncertainty and think discretion is the better part of valour," Simon Derrick, head of currency research at the Bank of New York Mellon.
"They are of the view after Ireland, will it be Portugal? The euro is headed lower and thinning liquidity conditions ahead of the year end will exacerbate volatility."
The euro EUR= was down 0.13 percent at $1.3475, not far from a seven-week trough of $1.3446 hit on trading platform EBS on Tuesday.
A convincing break there and then at $1.3436, a level representing the 50 percent retracement of the August to November rally, could pave the way for the euro to test $1.3334, the peak of the June-August rise.
