By Jessica Mead Of DOW JONES NEWSWIRES LONDON (Dow Jones)--Currency trading turned more positive towards the euro but remained cautious in European hours Wednesday on renewed hopes the euro zone's bailout fund would receive a substantial financial boost at a summit of regional leaders this weekend. That helped the euro edge further above $1.38 against the dollar, even though market strategists remained skeptical ahead of the summit, with a key Greek austerity vote also due Thursday. "We have our doubts about what can be delivered at the weekend. A lot of people are just wanting to wait until after the summit," said Paul Robson, senior currency strategist at Royal Bank of Scotland in London, adding that if they do deliver something, there will be plenty of time to get on the back of it. Although the cost of insuring European corporate and government debt against default fell in early trading, data showed euro-zone banks' use of the European Central Bank's overnight facilities rose sharply Tuesday, a sign that money-market tensions are mounting ahead of the weekend meeting. "The potential stumbling blocks over the issues of bank recapitalisation and the development of the [European Financial Stability Facility] are still huge. There is a clear risk that this weekend's crucial leaders' meeting will provide disappointment. The euro may have set itself up for a fall," said Jane Foley, senior currency strategist at Rabobank. Even so, efforts by Germany to manage market expectations this week may have lowered the bar for success and should limit the downside disappointment, RBS said. The euro at one point advanced sharply against the Swiss franc on speculation the Swiss National Bank would raise the floor in the cross to CHF1.25 from CHF1.20. This prompted a quick denial from the central bank and UBS currency strategist Chris Walker pointed out that a weekly government meeting always gets the market excited Wednesdays. "It's going to happen at one point, but I think the SNB is happy to wait until the market nudges the cross higher," Walker said, adding that the SNB is likely to wait for the market to do the work for them. Elsewhere, sterling barely budged after minutes from the latest Bank of England policy meeting revealed the Monetary Policy Committee had been unanimous in the vote to relaunch quantitative easing. With the market already quite negative on the pound and the euro unable to notch up further gains against sterling, sellers were forced out of positions, sending the pound to as high as $1.5815 against the dollar. Looking into the session ahead, the Norwegian central bank is expected to keep its key interest rate on hold at 2.25% at 1200 GMT. There is also U.S. September CPI inflation data and U.S. September new housing starts figures at 1330 GMT. At 1045 GMT, the euro was trading at $1.3838 against the dollar, compared with $1.3750 late Tuesday in New York, according to trading system EBS. The dollar was at Y76.76 against the yen, compared with Y76.79, while the euro was at Y106.24 compared with Y105.66. Meanwhile, the pound was trading at $1.5799 against the dollar, compared with $1.5717 late Tuesday in New York. The ICE Dollar Index, which tracks the greenback against a basket of currencies, was at 76.710 compared with 77.086 late Tuesday in New York. A summary of key levels for chart-watching technical strategists is below: Forex spot: EUR/USD USD/JPY GBP/USD USD/CHF Spot 1029 GMT 1.3850 76.77 1.5807 0.8974 3 Day Trend Range Bearish Bearish Bearish Weekly Trend Bullish Range Bullish Bullish 200 day ma 1.3965 79.82 1.6009 0.8817 3rd Resistance 1.3921 77.48 1.5895 0.9122 2nd Resistance 1.3914 77.17 1.5851 0.9048 1st Resistance 1.3890 76.91 1.5820 0.9022 Pivot* 1.3741 76.79 1.5724 0.8993 1st Support 1.3782 76.60 1.5705 0.8946 2nd Support 1.3725 76.30 1.5664 0.8909 3rd Support 1.3652 76.10 1.5545 0.8881 Forex spot: EUR/CHF Spot 1029 GMT 1.2427 3 Day Trend Bullish Weekly Trend Bearish 200 day ma 1.2287 3rd Resistance 1.2500 2nd Resistance 1.2475 1st Resistance 1.2465 Pivot* 1.2355 1st Support 1.2380 2nd Support 1.2330 3rd Support 1.2304 -By Jessica Mead, Dow Jones Newswires; +44 (0) 20 7842 9256, jessica.mead@dowjones.com (Dow Jones Technical Strategist Francis Bray and Eva Szalay contributed to this story.)

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