* Euro rises on hopes for Greek deal, gains could be limited
* Dollar/yen nears post-intervention peak of 79.553 yen
By Luciana Lopez
NEW YORK, Feb 17 (Reuters) - The euro climbed against
the dollar and the yen on Friday on hopes for a
rescue package for Greece, but gains were capped before a key
meeting on Monday that could nail down an agreement.
Greece edged closer to winning the 130 billion euro rescue
as officials said Germany was optimistic a deal could be struck
despite misgivings that Athens would stick to commitments.
Euro zone finance ministers were due to vote on the package
on Monday, which is a market holiday in the United States.
Still, some foreign exchange traders said they would be at their
desks.
Traders said uncertainty could keep the euro rangebound
until a rescue is finalized.
"For us we're probably going to go home pretty flat," said
John Doyle, a currency strategist with Tempus Consulting in
Washington, D.C. "We're still very hesitant until a deal is
done."
Greece, which has a 14.5 billion euro bond redemption
payment due on March 20, needs a rescue to stave off a
disorderly default.
Analysts expected the euro could gain further early next
week against both the dollar and the yen once euro zone
officials give their seal of approval to a Greek bailout.
"If on Monday officials find a solution to the Greek issue,
the euro could react positively and go up towards $1.33, though
not beyond $1.34," said Asmara Jamaleh, currency strategist at
Intesa Sanpaolo in Milan.
"But this doesn't mean the euro is going to rise higher in
the following months. The euro faces macroeconomic problems in
the euro area and a Greek solution won't mean the euro starts an
upward trend."
The euro rose against the dollar but trimmed early
gains to trade near flat as the New York session wore on. The
single currency edged up 0.11 percent to $1.3153, off the day's
high of $1.3198.
Against the yen, the euro rose 0.67 percent to
104.31 yen, down from an earlier high of 104.66 yen.
The Japanese currency weakened against the dollar, as well,
still pressured by the Bank of Japan surprise decision this week
to boost its asset-buying scheme by $130 billion.
The dollar rose 0.6 percent to 79.32 yen,
according to Reuters data, and hit its highest level since Oct.
31, when Japan sold a record 8.07 trillion yen in currency
intervention after the dollar hit a post-World War Two record
low of 75.311 yen.
This left it in sight of the post-intervention high on Oct.
31 at 79.553 on EBS, though traders reported offers at 79.30/50.
"A move above 80-82 yen is probably in sight and then we
would look at reducing our short yen positions slightly," said
Dagmar Dvorak, investment manager at Barings Investment
Management in London, which has total assets under management of
around $47.5 billion.
"If risk aversion, however, increases and the market starts
to test the Bank of Japan's resolve again by pushing the yen
towards more expensive levels this would offer an opportunity to
add to our short positions."
Barings held a short yen position for most of last year,
which they built more aggressively in September.
Upbeat U.S. jobs and factory activity data on Thursday
continued to support the dollar against the Japanese currency,
with U.S. inflation data in line with expectations on Friday.
But with the Federal Reserve committed to keeping interest
rates low, dollar gains based on higher U.S. yields were seen as
unlikely.
The Consumer Price Index "doesn't prevent another round of
quantitative easing to stimulate the economy and should keep
rates low for some time," said Brian Kim, currency strategist
with the Royal Bank Of Scotland in Stamford, Connecticut.
The dollar breached its 200-day moving average this week and
its next major resistance is seen around the 79.73 to 80.94 yen
area, a range formed by the cloud on the weekly Ichimoku chart,
a popular technical analysis tool.
