SYDNEY The euro extended its rebound from one-week lows in Asia on Friday following news Greece has reached a deal with international lenders on an austerity plan that would bring it one step closer to securing much-needed financial aid.
But the plan, including deep spending cuts and more tax hikes, must still be passed by the Greek parliament at a vote on June 28.
"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.
"It will be critical to watch how likely any Greek debt deal is likely to pass through the country's parliament."
The euro last traded at $1.4270, having bounced off a trough around $1.4125. This took the common currency back toward the middle of its well-worn range roughly between $1.4000 and $1.4700. Talk of offers around $1.4290/4310 looked set to cap the currency for now.
Against the safe-haven Swiss franc, the common currency climbed off a record low around 1.1838 francs to last stand at 1.1955 francs.
The bounce in the euro saw the dollar index .DXY, which tracks the greenback's performance against a basket of major currency, recoil to 75.238 from a one-week high of 75.795.
Versus the Japanese currency, the dollar was little changed at 80.44 yen, continuing to drift in a slim 79.80 to 81.00 range seen so far this month.
The Greek news helped offset more weak data out of the United States, which showed little improvement in the labor market this month as more people filed new claims for unemployment benefits last week.
Tracking the recovery in the euro, commodity currencies like the Australian dollar also climbed well off their lows. The Aussie dollar last stood at $1.0536, pulling away from a trough of $1.0455 -- the lowest since May 25.
A steep drop in oil prices, which tumbled 6 percent on Thursday to a four-month low, after the world's top consumers released emergency oil reserves for the third time ever, could help ease concerns about global growth if sustained.
Sterling, which slumped to three-month lows around $1.5938 on Thursday, edged back to $1.6025. 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.
"While our call at this stage is not for more QE, we view the risks of a further easing through another bout of QE as significantly more substantial than the market thinks. Ignore the debate in the minutes at your peril," analysts at BNP Paribas warned.
(Additional reporting by FX analyst Krishna Kumar; Editing by Wayne Cole)