Investing.com - The euro gave up early gains against the dollar on Thursday, slipping back towards one-month lows as hopes that Greece is closer to a deal with its lenders faded.
EUR/USD was at 1.0895, off the day’s highs of 1.0950 and not far from Wednesday’s one-month trough of 1.0818.
The euro gained ground after the Greek government said Wednesday it had started drafting an agreement with its international creditors, signaling progress in long-running negotiations to unlock more financial aid.
However, European officials subsequently played down suggestions of a deal, saying negotiators still had several issues to address before an agreement could be reached.
In its latest financial stability review published on Thursday, the European Central Bank warned that default risk expectations have “increased sharply in Greece” amid heightened political uncertainty.
Demand for the dollar continued to be underpinned by expectations that the economic recovery in the U.S. would push forward the timeline for higher interest rates.
Economic data released in the past week, including reports on inflation, new home sales, business investment and consumer confidence all indicated that the economy is gaining momentum after a slowdown in the first quarter.
The dollar rallied to 12-and-a-half year highs against the yen on Thursday. USD/JPY hit 124.39, the most since December 2002 and was last at 124.21.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was at 97.50, close to Wednesday’s five week peaks of 97.88.