RTRS: Euro slips as uncertainty persists, Fed in focus
* Greek government wins vote of confidence in parliament
* Market sentiment remains shaky as investors take profit
* Euro support at $1.4346, daily Ichimoku cloud bottom
* Eyes on Federal Reserve meeting, Bernanke presser
By Nia Williams
LONDON, June 22 (Reuters) - The euro slipped against the dollar on Wednesday as investors who bought the single currency following a vote of confidence in the Greek government took profits, signalling market concerns that the euro zone debt crisis is far from over.
Sterling also fell, tumbling to $1.6123 against the dollar and failing to gain against a broadly weak euro after Bank of England minutes showed policymakers raised the possibility of future quantitative easing.
The euro dropped 0.3 percent to $1.4366, well below the high of $1.4435 reached after the Greek vote while peripheral euro zone bonds spreads widened over German Bunds.
Traders cited upside barriers at around $1.4440-50 and said stop-loss orders were seen around $1.4340, just below support at the base of the cloud on the daily Ichimoku chart, a technical analysis tool popular among traders.
A Federal Reserve meeting later in the session, where Chairman Ben Bernake is expected to reiterate a dovish stance, could support the euro but analysts said it was vulnerable to a sell-off in light of Greek uncertainty.
"There was an initial knee-jerk reaction but a lot of people now perceive the confidence vote overnight as nothing more than a stop gap measure," said Adam Myers, FX strategist at Credit Agricole.
"People who went long on the euro are getting out now. The move is not that aggressive yet but by the end of today ahead of Bernanke I would expect to break this morning's low around $1.4250."
Event risk on the euro remained high despite the confidence vote as George Papandreou's government still faces the arduous task of passing an austerity plan to secure a new bailout from the European Union and IMF.
Euro zone policymakers have still not agreed on the scope and scale of a new Greek aid package and failed to resolve the issue of whether private sector investors should participate in any form of restructuring.
Escalating protests on the streets of Athens, where police fired tear gas at demonstrators shouting insults outside parliament during the vote, could also shake market confidence in Greece's ability to implement austerity.
The Greek cabinet is due to meet at 1300 GMT to approve a new austerity package, ahead of Papandreou attending an EU summit on Thursday in Brussels that investors will keep a close eye on for any signs of progress.
"In particular, investors will be looking for indications that the European heads of states have finally overcome their differences and stand ready to ratify the extension of the scope and scale of the euro zone bailout facilities -- the EFSF and the ESM," Citi analysts said in a note.
German Chancellor Angela Merkel rejected pressure from some German lawmakers to hit private holders of Greek bonds harder, saying that forcing them to take losses could unleash contagion in Europe and beyond that was hard to control.
FED RATE DECISION
The Federal Open Market Committee rate decision is due at 1630 GMT followed by a press conference at which Chairman Ben Bernanke is expected to comment on a slowdown in the U.S. economy.
Market players anticipate U.S. rates will remain on hold at a record low, in contrast with the euro zone where the ECB has already embarked on a monetary tightening cycle and signalled a rate hike in July.
The euro's favourable rate differentials have been behind much of the single currency's strength in the face of the recent debt crisis, as investors start to fret about the size of the U.S. budget deficit.
"The euro has scope to recover as long as we do not get negative news regarding Greece but there's still a lot of uncertainty," said You-Na Park, strategist at Commerzbank.
"The main event today is the Federal Reserve meeting which will probably weigh on the U.S. dollar since they will probably lower their GDP growth forecast. It will make clearer the different approaches regarding monetary policy between the European Central Bank and the Fed."
The dollar index , which tracks the greenback's performance against a basket of major currencies, stood at 74.809, well off last week's peak of 76.015.
Against the yen the dollar was last down 0.1 percent at 80.22 yen , with traders citing Japanese investor bids down to 79.50 yen and offers from Japanese exporters above 80.50 yen. (Reporting by Nia Williams; Editing by Catherine Evans) Currency bid prices at 1035 GMT. All data taken from Reuters with percent change calculated from the daily U.S. close at 2130 GMT.
