TOKYO: The euro sagged on Wednesday as investors' confidence on a Greek debt deal allowed focus to shift to the prospects of higher US interest rates ahead.
The single European currency bought $1.1163 and 138.32 yen in Tokyo, little changed from $1.1168 and 138.36 yen in New York, but considerably lower than $1.1393 and 139.95 yen in Asian trade on Tuesday.
The dollar was at 123.90 yen against 123.89 yen.
"Markets are pretty content with the idea that Greece and its creditors will do a deal before the June 30 deadline" on repaying massive debts, said Emma Lawson, senior currency strategist at National Australia Bank.
"And the Fed will hike in September, and China can avoid an equity market accident. Excellent," she said in a note, adding that helped push up prices of riskier assets higher.
But Lawson cautioned the Greek deal was yet to be signed and the US central bank yet to raise rates.
"We know that events aren't done, until they are actually done, and lots can happen in the meantime," she said.
Greece's Prime Minister Alexis Tsipras will meet the leaders of the country's international creditors on Wednesday in Brussels.
The meeting will be held on the sidelines of a eurozone finance ministers meeting there.
Athens presented new reform proposals to its creditors on Monday in a bid to unlock the last tranche of bailout funds and avoid defaulting on its massive debts at the end of June.
The euro was under pressure due to the European monetary easing even though optimism was growing that Greece will avert default.
"We suspect that positioning has been cleared out to the point where market participants are once again more comfortable returning to the consensus long-USD trade," BNP Paribas SA strategists led by Steven Saywell, the global head of foreign exchange strategy in London, wrote in a June 24 report.
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