SINGAPORE: The euro edged lower on Tuesday but still held near a six-week high hit the previous day, supported by market expectations for European leaders to come up with broad measures to contain the region's debt crisis at a summit on Wednesday. European leaders had neared a deal over the weekend on bank recapitalisation, and euro zone officials have said that France and Germany were close to agreement on how to leverage a euro zone rescue fund to stop bond market contagion. Hopes that euro zone leaders would soon decide on a framework to ease the debt crisis have given a boost to risky assets and the euro over the past couple of days. "Market players seem to be closing out positions, which had been betting on a rise in risk aversion. It seems like the unwinding of such bets rather than aggressive risk-taking," said Koji Fukaya, director of global foreign exchange research at Credit Suisse Securities in Tokyo. The euro appears to be getting support from such position unwinding, Fukaya said, adding that the euro may sag toward $1.35 or so once such short-covering runs out of steam. The euro dipped 0.2 per cent to $1.3901 , hovering near a six-week high of $1.3957 hit on Monday on trading platform EBS. Data from the US Commodity Futures Trading Commission released last week shows that currency speculators still held a large net short position in the euro of 77,720 contracts in the week that ended on Oct. 18. The euro faces resistance near $1.3989, its 200-week moving average, with additional resistance near $1.4040, which is roughly a 50 per cent retracement of the single currency's May to October decline. On the downside, there was talk of stop-loss euro offers at levels around $1.3750. DOLLAR/YEN The single currency's recent rally has weighed on the dollar. The dollar index, which measures the dollar's value against a basket of currencies, stood at 76.176 , near a six-week low of 75.985 hit this week.

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