By Alexandra Fletcher Of DOW JONES NEWSWIRES LONDON (Dow Jones)--The euro fell sharply from a one-month high against the dollar in European trading Monday, after a German government spokesman quashed investor hopes for a definitive solution to the euro zone's debt troubles at next weekend's crucial euro-zone summit. The euro initially rose to as high as $1.3914 against the greenback, reflecting early investor optimism after the Group of 20 industrial and developing nations resolved in Paris to ensure funding for banks and as hopes grew that a euro-zone comprehensive package might take shape to address the Greek debt crisis and boost the firepower of the European Financial Stability Facility in time for the euro-zone summit. But the euro reversed sharply and European shares came off their highs after a spokesman for German Chancellor Angela Merkel said she considered the dream of resolving all problems at the euro-zone summit impossible. Analysts said they saw it coming. "There was a perception today that politicians are starting to see the urgency of the euro-zone crisis which started today's session off with a positive tone," said Jane Foley, senior foreign exchange strategist at Rabobank. "But when you consider the ground they have yet to cover before October 23, I can see a lot of disappointment ahead because we haven't had much concrete news. Yes, we've had pledges and positive EFSF votes but when you consider that bank recapitalization, new stress tests, private sector haircuts and leveraging the EFSF are on the table, I can't see how it is possible to have a complete solution by October 23," she said. The dollar rose to a high of Y77.45 against the Japanese yen, extending its gains from Friday after Japanese government officials said a new round of measures against the persistently strong yen could be unveiled as early as this week. Although confirmation of those new measures have yet to emerge, Japan's Economic Minister Motohisa Furukawa said the government will remain fully vigilant toward the strong yen. Looking ahead, the European Central Bank's Juergen Stark speaks in Brussels at a hearing of the Economic and Monetary Affairs Committee, EU Parliament at 1435 GMT. At 1035 GMT, the euro was trading at $1.3811 against the dollar, compared with $1.3884 late Friday in New York, according to trading system EBS. The dollar was at Y77.25 against the yen, compared with Y77.22, while the euro was at Y106.70 compared with Y107.18. Meanwhile, the pound was trading at $1.5757 against the dollar, compared with $1.5828 late Friday in New York. The ICE Dollar Index, which tracks the greenback against a trade-weighted basket of currencies, was at 76.900 compared with 76.612 late Friday 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 1031 GMT 1.3825 77.32 1.5769 0.8954 3 Day Trend Bullish Bullish Bullish Bearish Weekly Trend Bullish Range Bearish Bullish 200 day ma 1.3970 79.88 1.6015 0.8813 3rd Resistance 1.3937 77.86 1.5975 0.9038 2nd Resistance 1.3921 77.48 1.5895 0.9007 1st Resistance 1.3915 77.45 1.5851 0.8984 Pivot* 1.3834 77.17 1.5801 0.8946 1st Support 1.3800 77.08 1.5719 0.8881 2nd Support 1.3787 76.94 1.5664 0.8835 3rd Support 1.3685 76.88 1.5545 0.8698 Forex spot: EUR/GBP Spot 1031 GMT 0.8767 3 Day Trend Bullish Weekly Trend Range 200 day ma 0.8121 3rd Resistance 0.8841 2nd Resistance 0.8809 1st Resistance 0.8796 Pivot* 0.8759 1st Support 0.8758 2nd Support 0.8707 3rd Support 0.8688 -By Alexandra Fletcher, Dow Jones Newswires; +44 (0) 20 7842 9462, alexandra.fletcher@dowjones.com (Dow Jones Technical Strategist Francis Bray contributed to this story.)

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