* Euro breaks $1.3430, hits 10-month trough vs dollar
* Hits 1.4232 Swiss francs before caution on SNB sets in
* Germany signals support of European aid for Greece
* But investors doubt quick Greece resolution at EU summit
By Satomi Noguchi
TOKYO, March 24 (Reuters) - The euro fell to an all-time low
against the Swiss franc on Wednesday after triggering a wave of
sell orders, and also hit a 10-month low on the dollar as doubts
that any solution for Greece would be smooth kept it locked in a
downtrend.
Selling against the Swiss franc quickly lost momentum once it
hit a record low of 1.4232 francs <EURCHF=R>, as traders grew
wary that the Swiss National Bank may step in to slow its fall.
Speculative accounts and a big German bank were said to have
sold, setting off stops, before caution set in with talk that the
market could be getting quite short on euros which would make it
vulnerable to a snap back if the SNB were to intervene.
But a later wave of selling against the dollar plunged the
euro to $1.3403 <EUR=>, its lowest since early May, and it
smashed support at $1.3430 before buying linked to an options
barrier said to be at $1.3400 gave it a temporary floor.
"The euro's heaviness stems from concerns about the euro zone
system -- whether it is functioning properly to back the
credibility of the single currency -- and this is an even bigger
problem than Greek debt woes," said a sales trader for a Japanese
bank.
The euro dropped 0.6 percent to $1.3416 <EUR=>. Traders said
there had been stop-loss sell orders at $1.3430, which once
triggered extended the euro's losses in a downtrend that has seen
it shed 6 percent against the dollar this year.
EU leaders hold a summit on Thursday and Friday, and Germany
has signalled for the first time that it may accept European
financial aid for Greece as a last resort.
But it has pegged its support to several conditions,
including the need for the International Monetary Fund to make a
"substantial contribution". []
Analysts said uncertainty over aid for Greece, combined with
lacklustre euro zone economic growth, could prevent the European
Central Bank from raising interest rates until well into next
year, a prospect also likely to weigh the single currency down.
"Be it the EU or the IMF, how either of them would rescue
Greece remains uncertain. The euro looks set to trade defensively
in the near term," said Masafumi Yamamoto, chief forex strategist
at Barclays Capital in Tokyo.
EURO/SWISS GIVES WAY
The euro fell 0.2 percent on the day to 1.4246 francs.
Dealers said the euro could eventually slide further, even
though many expected the SNB would step in at some point, and
some reported loss-cutting sell orders down to just below 1.42.
"The SNB will likely continue to intervene, but that will now
be used to smooth levels rather than change them," Tsutomu Soma,
senior manager at Okasan Securities in Tokyo.
"At this rate, despite some rebounds, the pair looks to be
headed toward 1.40."
The Swiss central bank is suspected of intervening in the
forex market over the past year as part of its efforts to protect
the Swiss economy.
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SNB Chairman Philipp Hildebrand said on Tuesday it would keep
fighting excessive appreciation of the franc to prevent deflation
surfacing, but analysts said it would probably shy away from
large-scale intervention as the economy recovered and it moved
towards normalisation of monetary policy. []
Against the yen, the euro dropped 0.5 percent to 121.60 yen
<EURJPY=R>, and the Japanese currency edged up against the
higher-yielding Australian and New Zealand dollars.
The greenback firmed 0.2 percent to 90.52 yen <JPY=> and on
its broader index <.DXY>, a gauge of its performance against six
other major currencies, it rose 0.4 percent to 81.210, coming
within sight of February's eight-month high of 81.342.
The New Zealand dollar dropped against the greenback after
data showed the country's annual current account deficit narrowed
in the fourth quarter, but the improvement was not as strong as
expected. []
The kiwi fell 0.3 percent to $0.7032 <NZD=D4>.
(Additional reporting by Kaori Kaneko and Charlotte Cooper)
