Euro slides as investors await outcome of talks over Greek debt

NEW YORK: The euro hit a seven-year low against the British pound and fell versus the dollar for a second straight session on Wednesday ahead of the outcome of a euro zone finance ministers' meeting as the region and Greece edged closer to a showdown.

Any failure to find common ground on Greece's debt burden will likely put more pressure on the euro.

Eurogroup Chairman Jeroen Dijsselbloem said on Wednesday ahead of the meeting that he did not expect an outcome from Greek talks, which weighed on the euro further.

"I think it's going to be really down to watching the headlines from the Eurogroup," said Vassili Serebriakov, currency strategist at BNP Paribas in New York.

The euro fell 0.1 percent to $1.1309 and shed 0.2 percent against the British pound to 74.03 pence after hitting its lowest in seven years.

Greek Finance Minister Yanis Varoufakis will present the country's demands for an end to its international bailout to the Eurogroup of euro zone finance ministers as well as a transition to a new debt restructuring deal. He will also seek a "bridge agreement" to buy time until June for a full settlement.

The euro moved higher on Tuesday on optimism a compromise could be reached, which would be more acceptable to markets than Greece leaving the euro zone.

The dollar hit a five-week high against the yen, bolstered by a rise in Treasury yields. It was last at 120.38 yen, up 0.8 percent. Trade was thin, with Japanese markets closed for a public holiday.

The dollar was helped by a rise in the benchmark U.S. 10-year Treasury yield, which popped above 2 percent on Tuesday for the first time in a month on views the Federal Reserve might lift interest rates by mid-2015.

"The story is still about U.S. yields and they have been trending higher and that has been supportive of dollar/yen," said BNP's Serebriakov.

Richmond Fed President Jeffrey Lacker, an inflation hawk, said on Tuesday that a June hike was an "attractive option," while San Francisco Fed President John Williams said economic conditions were "getting closer" to the point where it made sense to think about starting to normalize policy.

"U.S. two-year swap rates are now back to their highs above 0.90 percent as investors price the first hike in June," said Chris Turner, head of currency strategy at ING. "The dollar index should stay bid and push through 95 in the near term."