The euro has fallen close to a three-month low as mild positive news from Greece fails to restore confidence in the markets, while weaker-than-expected German data added to the concerns.
Greek banks have reopened after three weeks of closure but capital controls remained. Customers can withdraw just €420 ($455, £292) per week.
Greece received a bridge loan worth €7bn on Monday and the debt-laden nation had to spend it all. It paid an ECB bond due of €3.5bn plus interest of €700n.
The International Monetary Fund (IMF) said that Greece has repaid €2bn to the fund, clearing all arrears to it.
"I can confirm that Greece today repaid the totality of its arrears to the IMF. Greece is therefore no longer in arrears to the IMF," Gerry Rice, an IMF spokesperson, said in a press release.
"As we have said, the fund stands ready to continue assisting Greece in its efforts to return to financial stability and growth."
EUR/USD dropped to 1.0820, just 2 pips away from the May low, which was its lowest since late April. The single currency has fallen nearly 3% so far this month. The pair then rebounded to 1.0862 as the IMF announcement came.
Factory gate deflation deepened more than expected in June in Germany, data showed. The year-on-year producer price inflation came in at -1.4% when analysts had been expecting the May rate of -1.3% to repeat.
Month-on-month, the PPI rate slipped to -0.1% from 0% compared to the market forecast of 0%.
With not many important data points scheduled for this week from both the eurozone as well as the US, the market will continue to focus on Greece, especially the political climate shaping up in the middle of tougher austerity measures being implemented.
Technically, EUR/USD has been consolidating around 1.1000 ever since it moved off the March low of 1.0462. This phase seems continuing as of now.
However, a monthly closing break of 1.0520 on the downside will most likely lead to fresh multi-year lows, and on the higher side, 1.1190 can be crucial, a closing break of which will strengthen the case of a stronger rebound.