By William L. Watts and Lisa Twaronite, MarketWatch FRANKFURT (MarketWatch) — The dollar on Tuesday lost ground against most of its rivals as investors’ appetite for risky assets revived, partly on hopes European officials will make progress toward a second bailout package for Greece, seen as crucial to containing the region’s debt crisis. The dollar index DXY -0.50% , which tracks the U.S. unit’s performance against a basket of six currencies, slipped to 75.044 from 75.343 in late North American trading on Monday. The euro EURUSD +0.31% briefly rebounded above the $1.4200 level versus the dollar and traded at $1.4176 in recent action, up from $1.4120 late Monday. See real-time currency quotes and tools. Support was tied in part to comments by European Central Bank Governing Council member Ewald Nowotny. They were taken as a signal that the central bank was softening its opposition to any aid plan that includes a Greek default. Gains were also attributed in part to reports that senior euro-zone officials were set to weigh a menu of options in a meeting set for Wednesday. Euro-zone leaders are scheduled to participate in a special summit meeting the following day. Read more about Greek aid hopes. Bond yields ease Italian- and Spanish-government-bond yields eased after spiking higher on Monday, taking some pressure off the shared currency, strategists said. But investors should beware of the potential for further pressure on the currency in the runup to the summit meeting, analysts said. “The speculative market is heavily short [the euro] through puts, [while] the central-bank community has provided steady support, the scale of a potential negative reaction to a lack of progress on Thursday is far greater than the positive reaction to ‘a deal,’” said Kit Juckes, head of foreign exchange at Societe Generale, in a research note. “All of which makes us wary that despite occasional short-covering we could easily see a meaningful test of $1.39 [by the euro] in the next 48 hours,” he said. Against the Japanese yen, the dollar USDJPY -0.06% bought ¥78.95, compared with ¥79.02 late Monday. Though a Japanese financial official as well as a monetary official both commented on the yen’s strength on Tuesday, most strategists think the Ministry of Finance is unlikely to request that the Bank of Japan intervene around current levels. Speaking to Japan’s parliament, Finance Minister Yoshihiko Noda repeated his recent warning that currency moves were one-sided, and said he was closely watching exchange-rate moves, according to media reports. Also in parliament, Bank of Japan Deputy Gov. Hirohide Yamaguchi suggested the central bank could ease its policy further or take other measures if the yen continued to rise.

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