* Yen hits lowest level vs dollar since late April
* Euro gains on prospects of euro zone, IMF deal on Greece
* Prospects of U.S. fiscal cliff solution lifts riskier
LONDON, Nov 19 The yen fell to a seven-month low
versus the dollar on Monday on concerns about more monetary
easing in Japan while raised chances of a resolution to the U.S.
'fiscal cliff' helped the euro and riskier currencies.
The euro was also lifted by the prospects of euro zone
finance ministers agreeing with the International Monetary Fund
on a two-year funding deal for Greece.
The dollar was steady at 81.28 yen, having risen as
high as 81.59 yen on trading platform EBS, its highest
level since April 25.
Investors have dumped the yen after elections were called
for Dec. 16 and the leader of the opposition Liberal Democratic
Party (LDP), which is expected to win, called on the BOJ to
print "unlimited yen" and set rates at zero or below.
But investors were wary of pushing it much lower before a
Bank of Japan policy announcement on Tuesday, where most
analysts expect it will refrain from announcing additional
"Continued talk and questions over potential changes for the
BOJ has weighed on the yen. It's most unlikely the BOJ will make
major changes this meeting, but the trend (for the yen) seems to
be changing," said Audrey Childe-Freeman, head of foreign
exchange strategy at BMO Capital Markets.
Traders cited stop loss buy orders at 81.75 and 82.00 yen,
with option barriers reported at those levels too. However, an
options expiry at 81.25 yen due later in the day may keep the
dollar hovering close to that level.
The euro rose 0.2 percent to $1.2771, recovering from
a two-and-a-half month low of $1.2661 reached last week,
although it remained stuck below chart resistance at its 200-day
moving average of $1.2807.
European Central Bank policymaker Joerg Asmussen said on
Sunday the euro zone should agree next week on two years of
funding for Greece, while German Finance Minister Wolfgang
Schaeuble said he was banking on a deal.
However, euro zone officials, who meet on Tuesday, may
encounter opposition from the International Monetary Fund, which
wants a permanent solution to Greece's debt problems.
"This week, the euro is likely to be well bid, provided we
get a positive outcome from the meeting of euro zone finance
ministers," said BMO's Childe-Freeman.
Analysts at Morgan Stanley recommended buying the euro at
$1.2730, with a target of $1.33 and a stop at $1.2650.
They said they expected progress towards a compromise on the
next payment of funds for Greece, which should support the euro,
as well as anticipation that Spain would apply for a bailout,
paving the way for the European Central Bank to buy its bonds.
Signs negotiations to overcome major fiscal policy
disagreement in the United States had started well lifted
equities and also supported demand for riskier currencies,
including the euro.
On Friday, leaders of the U.S. Senate and House said they
would be flexible in efforts to settle fiscal policy differences
to avert a $600 billion 'fiscal cliff' of tax hikes and spending
The euro rose 0.2 percent against the yen to 103.78 yen
, having earlier hit a three-week high of 104.15 yen.
Some market participants said the yen may find support after
last week's 2.4 percent drop against the dollar, the Japanese
currency's biggest weekly percentage drop in nine months.
But given the potential for more monetary easing later, they
said the yen could fall further over a longer-term horizon.
"We've travelled too far, too fast over the last week or
so," said Gareth Berry, a strategist for UBS in Singapore.
But he added: "On a six-month view, dollar/yen higher is a