Euro vs Dollar reaches 10 month low

The euro was under further pressure on Wednesday, slumping to a 10-month low versus the dollar and a record low against the Swiss franc as uncertainty over aid for debt-stricken Greece knocked the single currency.

The move came ahead of an EU summit on Thursday and Friday, and after Germany signalled for the first time that it may accept European financial aid for Greece as a last resort.

Germany pegged its support to several conditions, including the need for the International Monetary Fund to make a "substantial contribution".

"The uncertainty over an aid package for Greece is clouding judgement towards the euro. Even if the IMF comes in, it shows the EU is not able to help itself," said Antje Praefcke, currency strategist at Commerzbank.

At 0850 GMT, the euro EUR= was trading down around 0.8 percent at $1.3384 after hitting a 10-month low of $1.3366.

Traders said a raft of stop-losses had been hit through the previous 2010 low in the $1.3440/30 area in Asia, with option-related stops then hit through $1.3400/1.3390 in Europe.

SWISS GAINS

The euro traded at 1.4280 versus the Swiss franc, after extending record lows to $1.4233 in Asia, despite comments from SNB President Phillip Hildebrand on Tuesday, saying the central bank would keep fighting excessive appreciation of the franc.

But traders said the central bank would probably shy away from large-scale intervention as the economy recovered and it moved towards normalisation of monetary policy.

"The SNB will likely continue to intervene, but that will now be used to smooth levels rather than change them," Tsutomu Soma, senior manager at Okasan Securities in Tokyo.

Technical analysts said there was little to support the euro on the charts against the franc, ahead of a 32-year support line which came in at 1.4205.

"We expect euro/Swiss to continue to head lower after SNB's Hildebrand said price stability was not in danger", added Commerzbank's Praefcke.

The greenback traded with a firm tone versus a basket of currencies, hitting its highest level since June 2009 of 81.481.