FOREX-Euro's bounce on Greece austerity deal fizzles out
* Euro/dollar eases, euro/Swiss slips towards record low
* Scope for more jitters as Greek parliament vote on austerity next week
* Signs of dollar funding strains may support dollar (Recasts, adds fresh quote, changes dateline, PVS Singapore)
By Anirban Nag
LONDON, June 24 (Reuters) - The euro slipped against the dollar on Friday as a short-covering bounce fizzled out on lingering uncertainty about the fate of Greece's austerity plan, and could lose more ground if a key German business survey disappointed investors.
The IFO survey is expected to show some weakness and will back views that growth in Europe's largest economy is entering a soft patch, hurting demand for the common currency.
The euro was last down 0.3 percent at $1.4219, with its bounce from a low of $1.4125 on Thursday, running out of steam. It fell to a session low of $1.4197, after stops were triggered under $1.4230 in light trade with traders citing selling by macro funds.
It had risen as high as $1.4279 following news that Greece had reached a deal with international lenders on an austerity plan that would bring it one step closer to securing much-needed financial aid.
"The euro is struggling a bit and this deal isn't really a game changer," said Jeremy Stretch, head of currency strategy at CIBC World Markets. "It just brings into focus the hurdles the Greeks have to cross with these austerity measures."
Indeed, the Greek government's austerity plan, including deep spending cuts and more tax hikes, must still be passed by the Greek parliament at a vote next week.
"The potential for further uncertainty suggests that the euro could pull back as quickly as it has rallied on the first sign of trouble," said David Rodriguez, strategist at DailyFX.
Market players cited talk of euro offers around $1.4290, which looked set to cap the currency for now. All eyes will be on the German IFO numbers and Stretch at CIBC World Markets said a weak outcome could weigh on the euro.
The euro fell against the Swiss franc to 1.1905 , heading towards a record low of 1.18470 struck on Thursday on trading platform EBS.
Recent signs of dollar funding strains may also weigh on the euro against the dollar, with investors watching to see whether European banks' dollar funding demand will increase in currency forwards and cross-currency basis swaps.
Dollar funding costs implied by euro/dollar one-year cross currency basis swaps as well as three-month euro/dollar forwards had both risen on Thursday , pointing to an increase in dollar funding demand through such instruments.
"If banks can borrow in interbank (money) markets even if they have to pay a premium, then that would be ok. If not, they may have to just buy dollars, although that would be something of a last resort," said Tsutomu Soma, senior manager for Okasan Securities' in Tokyo.
Such signs of increased dollar funding demand could lend support to the greenback in the currency market, right at a time when the dollar index, which measures the dollar's value against a basket of currencies, is flirting with a break of trendline resistance drawn off a peak reached in June 2010.
The dollar index last stood at 75.291 , hovering close to the trendline resistance that lay right around 75.64.
A rise above that resistance and the mid-June high of 76.015 could set the dollar index up for further gains, with the next major peak on charts coming in at 76.366. Above that, the 200-day moving average lies at 77.218.
The dollar was flat against the yen at 80.54 yen . A trader at a Japanese brokerage said strong bids were supporting the dollar at levels below 80.50 yen, while dollar offers were seen roughly around 80.80 yen to 81.00 yen.
Sterling, which slumped to a three-month lows around $1.5938 on Thursday, was down 0.2 percent at $1.5977.
The pound came under selling pressure this week after minutes of the Bank of England's June meeting flagged prospects of another round of stimulus through quantitative easing (QE), or asset purchases. (Additional reporting by Masayuki Kitano in Singapore; Editing by)