The euro edged up from a two-month low on Wednesday, finding support after a massive sell-off sparked by the euro zone debt crisis and heightened tensions in the Korean Peninsula.

The common currency ticked up on light buying after its fall of 1.9 percent to as low as $1.3359 EUR on electronic platform EBS prompted short-covering.

As the low represented a 38.2 percent retracement of the euro's rally this year to $1.4283 in early November from $1.1876 in June, the euro may have found short-term support there, said Sumino Kamei, a senior analyst at the Bank of Tokyo-Mitsubishi UFJ. more

The euro jumped broadly on Monday after Ireland sought an international bailout to tackle its banking and budget crisis, helping remove a major stumbling block that had plagued the single currency for weeks.

Most Asian-Pacific shares rose despite China announcing further credit tightening late on Friday, giving impetus to growth-linked currencies such as the Australian dollar. more

The euro rose on Thursday as optimism that Ireland's debt crisis may be easing fuelled speculative buying, but the rally was seen undermined by peripheral risks elsewhere and position squaring into year-end.

The dollar was broadly softer after subdued U.S. inflation data on Wednesday reinforced the Federal Reserve's case for monetary easing.

"We view this as a short-term speculative rally in the euro, driven by weaker U.S. CPI and some optimism for Ireland as the IMF and EU arrive in Dublin for talks," said Manuel Oliveri, currency analyst at UBS in Zurich.

"There are other factors at play for the dollar. Year-end flows should be supportive as profit-taking versus emerging currencies fuels repatriation," he said. more