Euro lower ahead of summit; Merkel gives Greece hours to save place in euro

The euro dipped for a second day against the dollar as finance ministers and leaders from the European Union gather to discuss Greece's fate.

“Time is running out” for Greece, German Chancellor Angela Merkel said after Greeks rejected creditors’ demands for more austerity in a referendum on Sunday and as citizens entered a second week of capital controls.

The European Central Bank poured even more pressure on the country by making it harder for Greek lenders to access emergency loans.

Later on Tuesday there is a meeting of finance ministers and leaders from the 19-member region.

Earlier, the International Monetary Fund notified Greece that the policy prohibits lending to countries that have missed payments, although it can offer advice of the staff.

On Monday euro region finance officials conference call made little progress towards narrowing the gap between Greece and its creditors, Bloomberg said referring to people with knowledge of the matter. The call took place in preparation for Tuesday’s round of talks.

Yesterday the single currency declined 0.5 percent versus the dollar, after initially dropping nearly 1.3 percent, and a measure of volatility rose for a third day. 

On Tuesday, EUR/USD was last at 1.0971 losing 0.77%.

In other currencies, the Australian dollar neared a six-year low after the country's central bank reiterated that “further depreciation seems both likely and necessary” after holding interest rates at a record low of 2 percent at a policy meeting Tuesday.

Stan Shamu, a market strategist at IG Ltd. in Melbourne, said that there is obviously much risk out there, “but if you look at the euro, it’s suggesting sentiment is a lot more stable than everyone thinks.”

“We are running out of time for a deal,” Michael Every, the head of financial-markets research at Rabobank Group in Hong Kong, wrote in a client note.

"No one is sure (among euro traders) if they should be long or short right now, on the uncertainty of deal/no deal, and on what either case means.”

“Ultimately you have a binary outcome: Either Greece leaves the eurozone or some sort of deal is done with the eurozone and the IMF,” said Mark McFarland, Hong Kong-based chief economist at Coutts & Co. to Bloomberg.