The euro turned lower on Tuesday as an initial boost from Greece'e overnight debt deal waned and investors began selling into rallies.
Euro zone finance ministers sealed a 130-billion euro deal on aid for Greece, averting a chaotic default next month. But traders said an agreement was widely flagged and the euro may struggle to rise above resistance around $1.3307.
The euro was 0.1 percent lower at $1.3222, pressured after earlier selling by Middle-Eastern investors pulled it well below the session high of $1.3293 reached after the success of the talks overnight.
Investors were concerned about how Greece would implement the harsh austerity measures demanded of it, while some also saw longer-term risks to the euro following an expected second injection of cheap funds by the European Central Bank next week.
The news of the Greece deal was reassuring and welcome but not enough to take the euro out of its recent range. The market will remain sceptical about implementation and will focus on the LTRO (long-term refinancing operation) next week, said Audrey Childe-Freeman, EMEA head of currency strategy at JP Morgan Private Bank.
Traders expected demand to sell the euro ahead of the 100-day moving average around $1.3307 would hamper further gains. A break above there, however, may prompt renewed buying that could see it rise above the recent two-month high of $1.3322.
If the euro breaks above the recent high of $1.3322 it opens the way for a move towards $1.35 and the temptation then will be to sell into the rally, Childe-Freeman said.
Near-term support for the euro was expected at the day's low of $1.3185.
Traders said the Greece crisis was far from over.
One hurdle has been cleared, but many more left to be cleared and for now it looks like the euro will trade below that 100-day moving average, said Jeremy Stretch, head of currency strategy at CIBC World Markets.
Strategists at Morgan Stanley said further upside in the euro was limited and a rebound would be an opportunity to investors to re-establish short euro positions.
However, the single currency may get a lift if euro zone provisional purchasing managers' surveys on manufacturing and services activity on Wednesday and Thursday's German Ifo sentiment survey show some improvement.
YEN AT MULTI-MONTH LOWS
Approval of the Greek deal saw the euro hit a fresh three-month high against the yen. It was last steady at 105.42 yen, pulling back from that high of 106.01 yen struck on trading platform EBS.
The yen hovered near multi-month lows against most other major currencies as last week's surprise easing by the Bank of Japan prompted speculators to step up selling of the yen.
The dollar last fetched 79.72 yen, not far from a 6 1/2-month high of 79.89 yen hit on Monday.
Our end-year forecast of 80 yen has almost been hit already, said Mansoor Mohi-uddin, strategist at UBS. The risks are now to the upside to this forecast with dollar/yen likely to trade in a 75-85 range in future compared to 75-80 previously.
Meanwhile, growing scepticism about the Greek deal hurt equities and higher risk currencies, with the growth-linked Australian dollar down 0.7 percent at $1.0672.
It extended losses after minutes from the Reserve Bank of Australia's Feb. 7 meeting were initially perceived as dovish, with board members reiterating that a benign inflation outlook meant it could cut rates if necessary.