* EU/IMF agrees on new debt target for Greece
* Euro rises to one-month high, later pares gains
* Japan opposition leader calls for bolder stimulus
By Cecile Lefort and Masayuki Kitano
SYDNEY/SINGAPORE, Nov 27 (Reuters) - The euro hit a one-month high versus the dollar on Tuesday after a deal on a new debt target for Greece but the gains proved fleeting as an agreement had been largely priced in, and some analysts said the single currency could start to lose momentum.
The yen slipped after Japan’s opposition leader and likely next prime minister after an election next month reiterated calls for bolder monetary and fiscal stimulus to revive the country’s economy.
In a breakthrough to release urgently needed loans to keep Greece’s near-bankrupt economy afloat, international lenders agreed on a package of measures to reduce Greek debt by 40 billion euros, cutting it to 124 percent of gross domestic product by 2020.
The euro rose to as high as $1.3010 on trading platform EBS, its highest level since late October. It later trimmed its gains and last stood at $1.2987, steady from late U.S. trade on Monday.
“It was not a huge reaction because (the deal) was already priced in,” said Joseph Capurso, a strategist at Commonwealth Bank of Australia, adding that the euro could ease by around a cent by the end of the week.
“Economic data in Europe is getting worse and you also have the unresolved U.S. fiscal cliff in the background,” he said.
The euro had pushed higher against the dollar over the past week, supported by hopes for a deal on Greece and also due to optimism that U.S. lawmakers will reach an agreement to avoid the ‘fiscal cliff’ of tax increases and spending cuts due to take effect next year.
Republicans and Democrats were still at odds, however, as Congress returned from its Thanksgiving holiday break.
The Japanese currency has fallen sharply over the past couple of weeks on mounting speculation that a new government after Dec. 16 general elections will force the Bank of Japan to ease monetary policy aggressively.
Shinzo Abe, the leader of Japan’s opposition Liberal Democratic Party, said the Bank of Japan must set a 2 percent inflation target, adding that its current “goal” of 1 percent is not enough.
The euro rose 0.3 percent versus the Japanese currency to 106.83 yen, bringing it closer to a seven-month high of 107.135 yen that had been set on Monday.
The dollar edged up 0.2 percent to about 82.24 yen, moving back towards a 7-1/2 month high of 82.84 yen hit last Thursday.
Data from the U.S. Commodity Futures Trading Commission shows that currency speculators increased their bearish bets against the yen in the week ended Nov. 20, a period when the Japanese currency began its slide.
“In the short-term, until elections, I think dollar/yen should stay a bit firm,” said Roy Teo, FX strategist for ABN AMRO Bank in Singapore, adding that the dollar might test the year-to-date high of 84.187 yen set in mid-March.
Still, the dollar’s rally against the yen may not prove very durable since U.S.-Japan interest rate differentials remain small, Teo said.
“We may see dollar/yen head towards this year’s high...But I don’t see it as a sustainable move,” he added.
The yield advantage of two-year U.S. Treasuries over two-year Japanese government bonds is now very minor, at about 17 basis points, and has eased from about 21 basis points in early November.
That suggests that Japanese investors have limited incentives to invest in Treasuries while taking on foreign exchange risk.