The U.S. dollar rose on Tuesday, underpinned by rising U.S. Treasury yields and prospects for interest rate increases, while the euro fell on concerns that any debt deal agreed by Brussels and Athens won't get passed the Greek Parliament.
A seven-year high in new U.S. single family home sales last month, combined with U.S. durable goods orders suggesting the manufacturing sector is at least stabilizing after a weak period, helped support the case for lifting benchmark U.S. interest rates.
Rising U.S. Treasury yields make dollar investments more attractive, and the case for lifting U.S. rates further was bolstered by Federal Reserve Governor Jerome Powell saying the U.S. economy could be ready for two interest rate increases this year, in September and December.
"My general sense is that if people are looking past Greece, we can return to the (monetary policy) divergence theme ... and when you do that you look at fundamentals. Despite the weak durable goods number this morning, generally speaking I think people see the U.S. economy accelerating, leading to a Fed rate hike," said Marc Chandler, global head of currency strategy at Brown Brothers Harriman in New York.
Euro zone leaders agreed late on Monday that the institutions representing Greece's creditors should try to wrap up a detailed agreement by Wednesday evening for their finance ministers to approve and present to them on Thursday.
That leaves barely 48 hours to scrutinize the complex plan, make sure the numbers add up, agree on a list of "prior actions" to turn the promises into laws quickly, find a legal way of extending the Greek bailout and get Athens the money it needs to pay the International Monetary Fund 1.6 billion euros ($1.8 billion) next week.
Analysts pointed to previous evidence of Greek Prime Minister Alexis Tsipras' weakness in the face of resistance from political allies at home. Greek lawmakers reacted angrily to concessions Athens offered in debt talks, undermining the optimism from Monday's talks.
"If you bought the euro on those (Greek) headlines last night, you come in this morning and realize it has fallen and there are still a lot of problems in the details," said Adam Myers, senior FX strategist with Credit Agricole in London.
The euro fell to a two-week low of $1.11350, down nearly 2 percent, before recovering some ground to trade at $1.1166, off 1.53 percent.
The greenback rallied to a more than one-week high of 0.93880 Swiss francs before drifting back to 0.9348 , up 1.48 percent on the day.