Euro firm but comes off highs after Greece vote

SAN FRANCISCO (MarketWatch) � The euro pared much of its gain against the U.S. dollar Monday after Greece�s parliament approved a package of austerity measures.

The unpopular measures, passed amid rioting in Athens, will pave the way for the approval of a second bailout that will allow the country to avoid default.

The euro EURUSD �pared gains to $1.3201, after approaching $1.33 earlier and compared to $1.3165 in late North American trading Friday.

/quotes/zigman/1652083 DXY 82.77, +0.09, +0.10%

The ICE dollar index DXY , which measures the greenback against a basket of six currencies, stayed down slightly at 78.963 from 79.149 Friday.

Analysts note that traders are still carrying significant short positions � bets against the euro. The need to reverse those bets as positive news on the debt crisis comes out is the more significant source of strength in the euro than any longer-term optimism about the region�s status.

Greece, facing a �14.5 billion ($19.1 billion) bond repayment on March 20, requires that the bailout funding be in place soon in order to avoid a messy default. Read more on Greek parliamentary approval.

�We are still some way off from that end goal,� said strategists at RBC Capital Markets. �It�s a tight timetable, with potential for missteps, ensuring headline risk will remain elevated.�

Over the past week, a survey of Credit Suisse�s sales team showed that investors� appetite for riskier assets has improved, but many remain cautious.

�Half of our respondents believe that clients are now adding to risk, an increase from 37% in our last survey,� currency strategists led by Ray Farris wrote in a note distributed Monday. The surveys are done on a biweekly basis.

Click to Play Greek police face Molotovs, stones

Police dodge gasoline bombs and stones as rage over a new austerity deal explodes in Athens over the weekend.

Investors appear most bearish on the dollar, the Japanese yen and the Swiss franc, he said, while the survey showed mixed euro-sentiment.

The U.S. dollar�s �among most bearish currencies for the first time since August 2011,� Farris wrote.

By contrast, investors appear most bullish on the Australian and Canadian dollars because of more stabilization in Europe, improving global growth data and the Federal Reserve�s recent policy decision to keep U.S. interest rates low for longer.

�These results suggest to us that although more clients are pursuing pro-risk trades, many investors remain defensive given the unresolved situation in Greece,� analysts said.

Pitting resistance above $1.33 mark

While the parliamentary vote buys Greece time, the crisis surrounding the country�s debt problems is likely to play out for years, said Jane Foley, senior currency strategist at Rabobank International in London. Read about the outlook for Greek austerity.

�For the time being, the risk that a Greek exit will lead to a huge spike in contagion through [Europe�s Economic and Monetary Union] means that politicians publicly continue to support Greece�s position within EMU,� Foley said. �However, politicians� exasperation with Greece�s lack of progress in reform has become detectable, meaning that over the medium term, Greece�s position within EMU may be less secure.�

She said the 100-day smoothed moving average at $1.3328 is likely to act as resistance for the euro-dollar pair.

Against the yen USDJPY , the dollar bought �77.60, little changed from �77.61 in late trading Friday.

The British pound GBPUSD �rose to $1.5776 from $1.5734 and the Australian dollar AUDUSD �firmed to $1.0743 from $1.0657.