Investing.com - The euro pulled away from session lows against the dollar on Tuesday amid media reports that attempts were underway to reach a last minute deal to avert a default by Greece later in the day.
EUR/USD was last at 1.1183, off 0.46% for the day after falling as low as 1.0955 earlier.
Media outlets in Greece reported that meetings were underway to attempt to find a solution to break the impasse by midnight, when Greece’s bailout program officially expires.
A €1.6 billion loan repayment to the International Monetary Fund is also falling due at the same time and without a rescue package in place Athens would almost certainly fall into arrears.
A default by Greece would add to fears over the country’s solvency and fuel doubts over the condition of Greek banks and the collateral they use for European Central Bank loans.
Greece shut down its banking system on Monday, with lenders ordered to stay closed for six days, following a decision by the ECB not to extend a lifeline of emergency funding.
Greece broke off negotiations with creditors on Saturday and in a surprise move Prime Minister Alexis Tsipras called for a snap referendum to be held on July 5 on whether to accept the terms proposed by lenders for extending the country’s bailout.
European finance ministers refused a request from the Greek government to extend the bailout program until after the referendum.
The euro showed little reaction after data on Tuesday showed that euro zone inflation slowed in June as energy costs fell.
Eurostat said the annual rate of inflation eased to 0.2% this month from 0.3% in May, in line with economists’ forecasts.
Underlying inflation, which excludes energy costs, rose 0.8% from 0.9% in May.
Another report showed that the unemployment rate in the currency bloc was unchanged at 11.1% in May.
The euro pared losses against the yen and sterling, with EUR/JPY at 137.20, off early lows of 135.89 and EUR/GBP at 0.7120 from 0.7083 earlier.
The single currency was slightly higher against the Swiss franc, with EUR/CHF edging up 0.16% to 1.0409 after the Swiss National Bank intervened in markets on Monday to weaken the franc.
The dollar was little changed against the safe haven yen, with USD/JPY at 122.54, holding above Monday’s one-month lows of 122.10.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was last at 95.34.