* Euro inches up against US dollar; profit-taking cited
* Investors sit tight ahead of EU summit on Greece
* US weekly initial jobless claims fall, supporting dollar
(Adds comments, details. Changes byline and dateline,
previous LONDON)
By Vivianne Rodrigues and Jessica Mortimer
NEW YORK, March 25 (Reuters) - The euro rose from a
10-month low against the U.S. dollar on Thursday ahead of a
summit meeting of European leaders to discuss possible aid for
heavily-indebted Greece.
The euro inched up after sinking below $1.33 during trading
hours in Asia as investors took profits on short positions.
Traders said, however, that sentiment on the single currency
would stay bearish.
Diplomatic efforts on the eve of the two-day European Union
summit failed to bridge differences over whether to offer a
safety net to Greece, with France and Germany discussing what
role the International Monetary Fund might play.
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Worries over debt sustainability in Greece and other
smaller countries in the region have helped push the euro down
almost 7 percent against the dollar this year.
"The uncertainty is hurting the euro," said Matthew
Strauss, a senior currency strategist at RBC Capital Markets in
Toronto. "Turning to the IMF could complicate the situation
because IMF assistance comes with a number of strict
conditions, both on the fiscal and monetary sides.
"Net-net, it's negative for the euro if the euro zone
cannot solve the problem on its own," he added.
In morning trading in New York, the euro was up 0.3 percent
at $1.3350, having earlier dropped to $1.3285 on Reuters data,
its lowest since May 2009. Only last week, the euro traded
above $1.38.
"There have been some very rapid moves in the last 48 hours
and everyone is a bit hesitant now. People want to get the EU
meeting out of the way before trying to push euro/dollar lower
again," said Niels Christensen, currency strategist at Nordea
in Copenhagen.
A Fitch downgrade of Portugal's sovereign debt on Wednesday
was a reminder that debt concerns in the euro zone are not
confined to periphery nations.
"A very bearish outlook for the euro will remain intact in
the near term, where unsustainable fiscal positions are being
punished," said Lee Hardman, currency economist at Bank of
Tokyo-Mitsubishi UFJ.
Technical analysts said that as long as the euro remained
below a previous support area at $1.3405 and the previous 2010
high of $1.3437, selling pressure would continue.
DOLLAR SUPPORT
The dollar index, a gauge of the greenback's performance
against six other major currencies, was flat at 81.839 <.DXY>.
The dollar was up 0.2 percent at 92.40 yen <JPY=>, near a
10-week high. The pair broke above its 200-day moving average
at around 91.55 yen, signaling further gains.
A report showing the number of U.S. workers filing new
applications for unemployment insurance fell last week gave
some support to the greenback. []
U.S. Federal Reserve Chairman Ben Bernanke was set to
testify in Congress at 10 a.m. (1400 GMT) on the central bank's
exit strategy from its loose monetary policy.
(Additional reporting by Steven C. Johnson in New York;
Editing by Padraic Cassidy)
