* Euro dips, Greek deal provides only brief lift
* Euro support seen at $1.2918 55-day moving average
* Yen regains ground as investors unwind short positions
By Philip Baillie
LONDON, Nov 28 The euro fell against the yen and
dollar on Wednesday as investors took profit on gains made after
euro zone policymakers agreed on a new debt target for Greece.
The yen also rose against the dollar as market players pared
back expectations of aggressive monetary easing by the Bank of
Japan and concerns about the U.S. fiscal cliff increased.
International lenders agreed a plan to cut Greek debt
earlier this week, allowing the country to avoid a chaotic
default and helping push the euro to a one-month high of
But a lack of detail and growing scepticism over how Athens
will implement the reforms needed to reach the new targets made
investors wary of pushing the single currency higher.
"(A deal on Greece)is a passing of the event risk so it is
people taking profits on the move higher," said Saeed Amen,
currency strategist at Nomura.
The euro dipped 0.2 percent to $1.2921, with the
55-day moving average at $1.2918 providing support.
With the Greek deal out of the way analysts said investors
were focusing on the U.S. fiscal cliff -- a combination of
automatic tax hikes and spending cuts due to kick in next year
that could tip the world's biggest economy into recession.
Barclays strategists said Europe's "muddle-through approach"
on Greece threatened to amplify the impact on the euro of the
outcome of the U.S. talks.
"If they go well, the relief on peripheral assets may have
legs, including the euro. If it goes bad, even France may get
questioned by an uncertain market, and we would expect the euro
to suffer," they wrote in a note.
The U.S. Congress pushed toward compromise on Tuesday on the
fiscal cliff, but agreement still appeared elusive despite
growing pressure from American business interests for action.
Comments by U.S. Senate Majority Leader Harry Reid about the
lack of progress by Democratic and Republican lawmakers also
fanned concerns, and added to demand for the dollar and yen
against perceived riskier currencies.
YEN REGAINS GROUND
The yen rose broadly as investors unwound long dollar and
euro positions. The Japanese currency had lost about 4 percent
against the dollar over the past two weeks as investors started
to price in a possible shift in monetary policy after Japan's
Dec. 16 election.
Shinzo Abe, likely to emerge as premier, has called for more
aggressive easing, but some investors have begun to question how
much impact he will have on monetary policy.
"Worries about the U.S. fiscal cliff have increased, while
the effects of the 'Abe trade' have faded for now," said Masashi
Murata, senior forex strategist at Brown Brothers Harriman.
"The market wants to see what the Bank of Japan actually
does," he said.
The dollar fell 0.4 percent to 81.80 yen, retreating
from last week's 7-1/2 month high of 82.84 yen. Market players
cited demand for the dollar at 81.70 yen and said this was
likely to check the Japanese currency's gains.
The euro also fell against the yen, dropping 0.7 percent on
the day to 105.65 yen, moving away from a seven-month
high of 107.135 yen set on Monday.