SYDNEY The euro was steadier in Asia on Friday after a roller-coaster ride in the past 24 hours that saw it slump to a record low on the Swiss franc, before staging a rebound as the market reacted to headlines about Greece's debt crisis.
The common currency last traded at 1.2049 Swiss francs, off a record low around 1.1946. It also climbed off a three-week trough versus the dollar to $1.4206, from below $1.4100 on the back of a short squeeze.
Technically, immediate resistance for euro/dollar is seen around $1.4235, the 38.2 percent retracement of the June 14-16 fall, with stops at $1.4250.
With a moment of calm returning to markets, the dollar index .DXY dropped back to 75.419 from a three-week high of 76.015.
"The U.S. dollar struggled to hold its ground on Thursday, and the short-term correction in the reserve currency may gather pace over the next 24-hours of trading as global policy makers talk down the fears surrounding the world economy," said David Song, analyst at DailyFX.
In a statement intended to soothe markets, the European Union's top economic official, Olli Rehn, said he expected the EU and the International Monetary Fund to release a crucial 12 billion euro loan tranche in early July to keep Athens afloat.
Rehn's comments came after European Central Bank governing council member Nout Wellink was reported in a Dutch newspaper as saying the European bail-out fund should be doubled to 1.5 trillion euros ($2.15 trillion) if politicians wanted private sector investors to participate in a second bailout for Greece.
Markets were already skittish over Europe's dithering on a second aid package for Greece, due to differences over how to make private investors share the burden.
Europe's paymaster Germany is insisting that banks, pension funds and insurance firms that hold Greek debt swap their bonds for new ones with longer maturities.
But fearful that this solution could create a "credit event" that would prompt rating agencies to label Greece in default, the ECB, European Commission and France all favor a softer option in which holders of Greek bonds would be asked to buy new Greek debt as their holdings mature.
Germany Chancellor Angela Merkel will meet with French President Nicolas Sarkozy later on Friday to try to resolve this dilemma.
"If an agreement can be hammered out between these two, then that would pave the way for a broader agreement," BNP Paribas analysts wrote in a note.
But they warned the uncertainty surrounding Greece could see the euro reach new lows versus the safe-haven Swiss francs.
Against the yen, the dollar was at 80.60, down from this week's high near 81.00, but still well within the prevailing range roughly between 80.00-82.00.
Dollar/yen seemed to have found a base since falling from a peak around 85.50 set in April.
Elsewhere, the Australian dollar perked up after drooping to three-week lows below $1.0500 on Thursday. It last traded at $1.0570.
(Editing by Wayne Cole)