The European common currency pared its earlier advance, falling from three-week high versus the U.S. dollar, as Greek officials struggled to struck a deal with creditors, raising concerns the Greek government may default in March as it has to repay 14.5 billion euros.

The negotiations reached an impasse as the Greek government rejected 4% interest rate on new loans, claiming that the maximum is 3.5% which was also supported by euro area finance ministers.

Now, worries are coming back again to markets after the optimism seen last week following the successful bond selling by euro area economies as the Greek talks with bondholders do not show any progress.

In fact, the concerns offset the positive PMI data and Spanish bond selling. Euro area manufacturing showed a narrowed contraction in January as the advanced reading came in at 48.7 from December's reading of 46.9, while services recorded an expansion of 50.5 in the same month compared with the prior contraction of 48.8.

On the other hand, the Spanish Treasury was able to sell 2.51 billion euros of three-month and six-month bills, meeting the maximum target for the sale, after the bonds found stronger demand and witnessed lower yields.

Concerning the EUR/USD pair, it dropped on the daily basis to trade around 1.3002 after recording a high of 1.3062 and a low of 1.2985.

The trading range for today is among the major support at 1.2795 and the major resistance at 1.3195.

Oppositely, the dollar index, which tracks the dollar movements versus a basket of major currencies, rebounded to touch a high of 79.90, after getting strong support at 79.60 levels, compared with the day's starting level of 79.80.

As for the USD/JPY, it rose on the daily charts to trade around 77.27 after reaching a high of 77.38 and a low of 76.93.

The trading range for today is among key support at 76.10 and key resistance now at 78.30.

Moving to the GBP/USD pair, it slipped on the daily charts, following the general trend in the market, despite the improvement in U.K. budget deficit as U.K. public sector net borrowing excluding interventions showed that the deficit narrowed to 13.7 billion pounds in December from the revised 17.9 billon pounds.

The pair is currently hovering around 1.5560 while recording a high of 1.5578 and a low of 1.5531, while the trading range for today is among key support at 1.5370 and key resistance at 1.5720.