Investing.com - The euro ground lower against the other major currencies on Wednesday, even as European equity markets were boosted by fresh hopes for a deal between Greece and its creditors.
EUR/USD was down 0.34% to 1.1104 from 1.1145 late Tuesday.
Market sentiment was boosted after Greek Prime Minister Alexis Tsipras sent new proposals as part of a request for a third bailout, indicating that he was prepared to accept the majority of spending cuts demanded by the country’s creditors.
But German chancellor Angela Merkel said Wednesday there will be no negotiations on a new bailout for Greece before Sunday’s referendum.
She added that while the door to talks with Greece remained open, the last set of Eurogroup proposals, put forward before negotiations broke down last weekend, had expired along with Greece’s second bailout.
On Wednesday Greece became the first developed country to default on the International Monetary Fund after its second bailout program expired late Tuesday.
The IMF confirmed that the Greek government failed to make a scheduled €1.6 billion loan repayment by close of business on Tuesday.
The fund said Greece can now only receive further funding after its arrears are cleared. Greece asked for a last-minute repayment extension on Tuesday, which the fund said it will consider "in due course."
The default by Greece added to fears over the country’s solvency and fueled doubts over the condition of Greek banks and the collateral they use for European Central Bank loans.
Speculation was mounting that Prime Minister Tsipras would cancel a snap referendum due to be held on July 5 on whether to accept the terms proposed by lenders for extending the country’s bailout.
European leaders have said the referendum is ultimately a vote on whether to remain in the euro zone.
EUR/JPY was little changed at 136.48, while EUR/GBP dipped 0.11% to 0.7092.
Meanwhile, the dollar gained ground against the yen, with USD/JPY rising 0.36% to 122.94.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.32% to 96.06, boosted by the weaker euro.