New York: The euro gained against the dollar and the yen on Friday on hopes for a rescue package for Greece but gains were capped before a key meeting tomorrow with investors hesitant to make big bets before a long US holiday weekend.

Greece edged closer to winning the €130-billion (Dh624 billion) rescue as officials said Germany was optimistic a deal could be struck despite misgivings that Athens would stick to commitments.

Eurozone finance ministers are due to vote on the package tomorrow, which in the United States is the Presidents Day market holiday. Given the stakes, however, some US traders are expected to be at their desks that day.

Traders said uncertainty could keep the euro rangebound until a rescue is finalised. "We're still very hesitant until a deal is done," said John Doyle, a currency strategist with Tempus Consulting in Washington, DC.

The euro rose against the dollar, last up 0.1 per cent to $1.3153, though off the day's high of $1.3198. For the week, the euro fell 0.4 per cent against the dollar.

Against the yen, the euro rose 0.8 per cent to 104.55 yen, down from a peak of 104.66 yen, the highest since December 5. The euro also posted its best weekly gain against the yen since January 29, with a 2 per cent gain, using Reuters data.

Greece, which has a €14.5 billion bond redemption payment due on March 20, needs a rescue to stave off a disorderly default.

Analysts expect the euro could gain further early this week against both the dollar and the yen once Eurozone officials give their seal of approval to a Greek bailout. Asmara Jamaleh, currency strategist at Intesa Sanpaolo in Milan, said it could go as high as $1.3300 though not beyond $1.3400.

But even if gains materialise in the short-term, they are not expected to hold given so many interests have to agree and provide funding even as Eurozone economic growth is questionable in the near term.

"The long-term implications still point to a weaker euro/dollar and any rally is just temporary relief before the next major leg lower towards 1.2000," said Christopher Vecchio, currency analyst at DailyFX in New York.

The Japanese currency also weakened against the dollar, still pressured by the Bank of Japan's surprise decision last week to boost its asset-buying scheme by $130 billion.

The dollar rose 0.8 per cent to 79.48 yen, according to Reuters data, and hit its highest since October 31. That day Japan sold a record 8.07 trillion yen in currency intervention after the dollar hit a post-Second World War record low of 75.311 yen on electronic trading platform EBS.

Friday's gains left the dollar in sight of the post-intervention high on October 31 at 79.553 on EBS and 79.51 on Reuters, though traders reported offers at 79.30/50.

"A move above 80-82 yen is probably in sight and then we would look at reducing our short yen positions slightly," said Dagmar Dvorak, investment manager at Barings Investment Management in London, which has total assets under management of around $47.5 billion.

"If risk aversion, however, increases and the market starts to test the Bank of Japan's resolve again by pushing the yen towards more expensive levels this would offer an opportunity to add to our short positions."

Barings held a short yen position for most of last year, which they built more aggressively in September.

The dollar gained 2.4 per cent last week against the yen, its best week since November 6.