The euro fell to a seven-week low against the dollar and a two-month trough against the yen today and is seen testing pivotal support areas after IMF chief Dominique Strauss-Kahn was charged with attempted rape, increasing uncertainty on aid for Greece and other indebted euro zone countries.

The news on Mr Strauss-Kahn, who had been seen as a front runner to be France's next president, soured investor risk appetite, which had already been strained by a rout in various commodities and falls in share prices in the past two weeks.

"This came at a really bad time for the euro as it could delay efforts to put together a rescue package for Greece. It's adding salt to their wounds," said Tsutomu Soma, manager of foreign bonds at Okasan Securities.

Mr Strauss-Kahn had been due to meet German chancellor Angela Merkel yesterday and join euro zone finance ministers on Monday to discuss the region's debt crisis and how to handle Greece, which is struggling to meet the terms of a €110 billion European Union/IMF bailout last year. His lawyers said he would plead not guilty to the charges against him.

The euro fell as far as $1.4048, its lowest since March 30th, having dropped 6 per cent from a 17-month peak of $1.4940 hit less than two weeks ago.

Still, investors were careful about selling the European currency further as $1.40 appeared to be an important psychological level.

"A slew of euro-selling that we've been seeing could slow down from here. The pessimism over Greece and the latest news triggered massive euro sales, but recent moves have been a bit too rapid," said Makoto Noji, currency analyst at SMBC Nikko Securities.

There is talk of some large bids in the euro from around $1.4050 to $1.4000. Just below that, the $1.3900 to $1.4000 region is an area that has a bunch of support levels, but also where stop-loss orders are said to be lurking.

Some market players say medium-term players and corporate names have placed euro stop-loss sell orders near $1.4000, and that options-related euro sell orders may also emerge if the euro drops to around $1.4000.

In terms of support, the euro's 200-week moving average lies right around $1.4000, the bottom of the daily Ichimoku cloud is at $1.3957, the 100-day moving average is at $1.3922 and the 50 per cent retracement of the euro's January to May rally lies near $1.39. Still, a break of this area could point to a target of $1.3655.

Market players said the euro could come under pressure as a resolution to the Greek crisis is unlikely at a euro zone finance ministers meeting today.

Oil and precious metals were weaker in early trade, not helping the euro, while the Australian dollar also slipped 0.2 per cent to $1.0550.

Data from a US financial watchdog showed speculators still had hefty long positions even after they trimmed their long positions in the euro - and other higher-yielding currencies such as the Australian dollar - in the week to Tuesday, which suggests chances of more liquidation of euro long positions.

As the euro sagged, the greenback's index against a basket of six major currencies hit a six-week high of 75.950.

"The market will be focusing on the euro zone ministers' meeting for now. But players' focus could shift back to US monetary policy after the release of the Fed's policy minutes on Wednesday," a trader at a Japanese bank said.

The dollar had been falling for much of this year on the view that the Fed will be extremely reluctant to raise rates as it worries about persistently high unemployment.

The Japanese yen was briefly helped by a stronger-than-expected reading in Japan's machinery orders data for March, but it quickly lost gains as the data is known to be highly volatile and gives little insight on the impact of the March 11 quake.

The yen was also under slight selling pressure after Moody's Investors Service said the trend for credit ratings in the Asia-Pacific region was stable except for Japan.

The yen stood at 80.94 yen per dollar. The US regulator's data showed speculators became net long in the yen for the first time in six weeks last week.

The euro edged above 114 yen after slipping to a two-month low of 113.35 yen.

Reuters