The euro rose against the dollar and yen in Asia Friday as remarks by European Central Bank President Jean-Claude Trichet in support of potential International Monetary Fund aid for Greece prompted U.S. hedge funds to pick up the single currency.

Traders said the euro's near term direction will depend on how euro-zone leaders conclude their discussions on the issue later in the day. Leaders at a two-day summit in Brussels have so far backed a deal under which they and the IMF would jointly bail out Greece should the country's debt troubles intensify.

Speaking at a news conference during Asian morning hours, Trichet said joint financial aid for Greece from the EU and IMF would be a "workable solution," and denied criticizing the inclusion of IMF financing in any rescue package.

On Thursday, the euro fell after Trichet said in a prerecorded television interview that IMF aid for Greece, instead of from euro-zone member countries, would be "very, very bad." The currency stood at $1.3334 as of 0350 GMT, compared with its New York level of $1.3282 late Thursday, and was at Y123.51 compared with Y123.13.

"Players took Trichet's (later) remarks positively and bought back the euro," said Yuzo Sakai, a foreign-exchange manager at Tokyo Forex & Ueda Harlow. "Expectations are growing that (the EU) may come up with some sort of plan."

The euro's near-term direction depends on the final results of the EU summit, dealers said. If the EU and the IMF agree to an effective joint plan to support Greece, that may buoy the euro briefly toward Y123.70 and $1.3360 due to the receding risk of Greek default, dealers said.

In the longer term, however, the currency's outlook remains bleak amid uncertainty over how Greece is going to reduce its huge debt, and the possibility of similar problems emerging in other European countries, dealers said. The euro could fall to Y117.00 and $1.2700 in the coming month, they added.

Meanwhile, the dollar fell against the yen after rising to a two-and-a-half month high overnight in New York, as Japanese exporters sold the dollar on the view that Y93.00 is an attractive level at which to sell. As of 0450 GMT, the U.S. unit stood at Y92.55, compared to a high of Y92.96 overnight. The ICE Dollar Index, which tracks the greenback against a trade-weighted basket of currencies, was at 81.892 from 82.169.