NEW YORK (Reuters) - The euro rose against the U.S. dollar on Wednesday after the Greek government endorsed a 4.8 billion euro austerity package, boosting hopes the heavily indebted country would get help from the European Union.
The euro gained roughly half a U.S. cent after a government source told Reuters the Greek cabinet decided on the plan, which included a rise in value added tax to 21 percent and a cut in public sector salary bonuses by 30 percent.
Trading in the euro/dollar was volatile and markets remained wary over whether the plan would be enough for Athens to win financial support from Germany and France.
We believe today's developments go a long way toward pacifying the markets which have become preoccupied with fragmentation risk in the region, said Boris Schlossberg, director of currency research at GFT in New York.
If the Germans and the French offer support for Greece, the sense of crisis may lift from the markets and the EUR/USD could see a short covering relief rally over the next several weeks, he added.
The euro briefly came under pressure after a German government spokesman said Germany would not offer any aid to Greece on Friday when Chancellor Angela Merkel meets Greek Prime Minister George Papandreou in Berlin.
In early New York trading, the euro was 0.4 percent higher on the day at $1.3657. Stop-losses were seen at $1.3680 with a technical target at $1.3693, traders said.
On Tuesday, the euro fell as low as $1.3432, its weakest since mid-May 2009. Greece's fiscal crisis has helped drive the euro down nearly 10 percent against the dollar since December.
Against the yen, the dollar traded little changed at 88.75 yen, after earlier hitting as low as 88.47 yen on electronic trading platform EBS, its lowest since December.
The dollar gained versus the Japanese currency immediately after data showing U.S. private employers shed 20,000 jobs in February, fewer than the 60,000 jobs lost in January.
We're clearly getting to that stage where the employment situations is looking less bad, says Matthew Strauss, senior currency strategist, at RBC Capital Markets in Toronto.
(Additional reporting by Gertrude Chavez-Dreyfuss and Tamawa Desai in London)
(Editing by Theodore d'Afflisio)