LONDON: The euro rose against the dollar on Wednesday, with investors hopeful European leaders will reach some kind of deal to ease the debt problems in Greece at this week's summit but doubtful that this would ease fears of contagion. The euro was up 0.3 percent versus the dollar at $1.4198 but any gains were seen limited, leaving it in a range below last week's high around $1.4283 and vulnerable to signs the debt crisis could still spread to larger countries like Italy and Spain. German Chancellor Angela Merkel on Tuesday dampened expectations that Thursday's emergency summit would produce any comprehensive solution to Greece's debt crisis, saying further steps would be needed. However, the euro was helped as French ministers said European leaders were less divided than media was reporting and were likely to reach an accord at the summit that will ease Greece's debt woes. Better appetite for risk among investors also buoyed the euro and weighed on the dollar, with European equities up 0.7 percent on signs of progress on a U.S. budget-reduction deal and strong earnings from Apple . "There is a feeling that there will be some kind of deal on Greece at the summit, but there are no guarantees this will ease concerns about the crisis spreading to Italy or Spain and people are unlikely to push euro/dollar too much higher," said Niels Christensen, currency strategist at Nordea in Copenhagen. "The uncertainties over the U.S. budget deal and the debt crisis in the euro zone are more or less balancing each other out". Late on Tuesday, a group of Democratic and Republican senators presented a new plan that could revive stalled U.S. debt talks and avert a default by the world's biggest economy. The euro sat well above a four-month low near $1.3838 hit last week, with support near $1.4120, which roughly coincides with trendline support on hourly charts, with traders saying it was propped up by Asian sovereign demand. It faces resistance near $1.4219, a 76.4 percent retracement of its recent drop to $1.4015 from $1.4282. Higher up, there is more resistance near $1.4300, around the 55-day and 100-day moving averages. Some technical analysts pointed to the fact that the 55-day average will soon move below the 100-day average, a bearish signal that could see the euro target its 200-day average around $1.3914. "I don't think anyone can buy the euro wholeheartedly," said Tsutomu Soma, senior manager for Okasan Securities' foreign securities department in Tokyo, adding the euro may struggle to rise above resistance between $1.4250 and $1.4300 in the near term. The euro could find some support if Asian central banks convert some of the dollars purchased via dollar-buying intervention into the single currency. Asian currency traders said a number of Asian central banks were spotted conducting dollar-buying intervention on Wednesday, including the central banks of Thailand and the Philippines.

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