Media reports indicating that the IMF is proposing to boost its lending resources by $1 trillion reversed gains in safe-haven German government bond prices as the news encouraged buying of riskier assets.
But the focus is on a meeting between international creditors and the Greek government later on Wednesday to resume talks that broke down last week over the interest rate Greece will offer on new bonds and a plan to enforce private investor losses.
A deal with the private sector is vital to cash-strapped Athens if it is to gain its next batch of international aid and avoid going bankrupt when 14.5 billion euros ($18.5 billion) of bond redemptions fall due in late March.
"Greek bond negotiations could trigger more euro weakness as they have to close a deal soon, before Greek debt repayments are due in March," Richard Falkenhall, currency strategist at SEB in Stockholm said.
The euro traded up to session highs of $1.2845 on the IMF reports and away from the $1.2624 low hit on Friday, its weakest rate since last August.