Investing.com -- After falling to a monthly low early in Tuesday's session, EUR/USD pared some of the losses late in U.S. afternoon trading as Greece outlined a revised proposal to its frustrated creditors in a last-ditch effort to remain in the euro zone.
On Tuesday night in Brussels, Greece prime minister Alexis Tsipras proposed a two-pronged plan to top euro group leaders aimed at helping the beleaguered state avoid bankruptcy. The short-term portion of the proposal includes a three to four month bailout that could allow Greek banks to remain open and allow Tsipras' government to repay debts to the European Central Bank and International Monetary Fund. It would then be followed by a two-year bailout, which would include significant debt relief from the nation's troika of creditors.
Following the emergency meeting, EUR/USD rose sharply to 1.1002 to end the session down 0.0053 or 0.48%. Earlier, the currency pair plunged to a four-week low at 1.0917, as hopes for an imminent deal appeared slim. For the session, EUR/USD traded between a low of 1.0917 and a peak of 1.1060.
EUR/USD likely gained support at 1.0867, the low from May 28 and was met with resistance at 1.1350 the high from June 21.
Germany chancellor Angela Merkel issued a stark warning on Tuesday that Greece only had a matter of days to strike a new deal after its second bailout expired early last week. Over the weekend, Greek voters emphatically rejected the euro zone's latest cash-for-reforms deal in a historic referendum. Tsipras also spoke over the phone with U.S. president Barack Obama before Tuesday's critical summit in an effort to pressure Germany to ease some of the strict austerity measures deemed necessary to reach an accord. In recent days, the White House has urged leaders from the euro zone to work collaboratively in order to prevent a Greek default and subsequent departure from the area.
Greece is likely to lose access to emergency aid from the European Central Bank if it is unable to meet a €3.5 billion obligation on July 20. Without the emergency liquidity assistance from the ECB, Greek banks throughout the nation could become insolvent in a matter of days.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, surged to a monthly-high of 97.44, before falling slightly back to 96.87 at the close of trading. The dollar has still gained more than 0.6% over the last two sessions.
Yields on U.S. 10-Year Treasuries fell three basis points to 2.26% while yields on German 10-Year bunds dropped 12 basis points to 0.64%. Over the last 52-weeks, yields on German bunds have declined by more than 60 basis points.