Investing.com -- EUR/USD fell considerably on Tuesday one session after enjoying one of its highest one-day moves of the year, as the drama surrounding the Greek Debt Crisis continued.
After surging more than 2.3% on Monday during a choppy day of trading, EUR/USD dipped 0.82% to 1.1144, as currency traders kept a close eye on negotiations between Greece and its international creditors. For the month, the currency pair gained more than 1.5% after opening June below 1.10.
EUR/USD likely gained support at 1.1048, the low from June 5 and was met with resistance at 1.1438, the high from June 18.
An emergency conference call between Greece and its euro zone creditors ended on Tuesday night without a deal in the tense, longstanding negotiations. As a result, a €240 billion stimulus program, Greece's second bailout since 2010, expired as expected. Netherlands finance minister Jeroen Dijsselbloem, the head of the euro group of finance ministers, said on Tuesday evening that negotiations will continue on Wednesday.
Separately, Greece failed to make a €1.5 billion repayment to the IMF stemming from a 2010 bailout, before the end of Tuesday's deadline. Greece joins Zimbabwe, Sudan, Somalia and Liberia as the only nations with overdue repayments to the IMF over the last decade.
While Greece will become the first advanced economy in the 71-year history of the IMF to be placed in arrears, its failure to meet the obligation on time will not yet result in full default on its sovereign debt. If Greece remains in arrears only for a short period of time, there is a possibility the IMF will show leniency to the Mediterranean state once it repays its debts. Any nation in arrears with the IMF, which occurs when a debt or liability is overdue, is unable to receive access to the organization's resources until the debts are settled.
Earlier, Greece proposed a two-year bailout program under the European Stability Mechanism, the euro zone's bailout fund. The proposal comes days after the Greek parliament approved a public referendum on July 5, which is largely viewed as a proxy on whether its citizens would like to remain in the euro zone.
“From the first moment, we made clear that the decision to hold a referendum is not the end but the continuation of negotiations for better terms for the Greek people," the Greek government said in a statement. "The Greek government will until the end seek a viable agreement within the euro.”
Germany chancellor Angela Merkel, meanwhile, remained adamant that no bailout discussions should be held between the two sides until after the referendum is completed.
Yields on Spanish and Italian 10-year bonds fell five and six basis points each to 2.29% and 2.33% respectively, quelling fears of contagion in Europe if Greece leaves the area. A spike in bond yields could provide signals that a Greek departure might trigger a downturn among a number of economies throughout the zone.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, surged 0.81% to 95.71. USD/JPY fell 0.07% to 122.46, while USD/CAD rose 0.71% to 1.249.