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The euro slid to a two-week low and a rally in European shares stalled on Wednesday after a Greek official said the country may not make an upcoming repayment to the International Monetary Fund.
The euro's fall follows remarks from a European Central Bank board member on Tuesday that the central bank could increase the pace of its bond-buying in May and June, bringing its losses against the dollar this week to more than 3%.
The pause in European shares mirrored the sticky performance of Asian bourses, although the Nikkei in Tokyo jumped to a 15-year high after Japan posted surprisingly strong economic growth for the first quarter.
European bank shares were in focus were in focus after Switzerland's UBS paid $545 million to settle with US authorities over currency rigging. Four other global banks are expected to settle later on Wednesday.
Ahead of minutes from the US Federal Reserve's Open Market Committee due later on Wednesday, the focus for investors will likely be on Greece and the euro's steep fall this week.
"A deal for Greece would remove a big risk factor from the euro and be euro-positive. Failure, on the other hand, could be disastrous," said Marshall Gittler, head of global FX strategy at IronFX.
The euro fell as low as $1.1065 early on Wednesday, off almost three cents since ECB Executive Board member Benoit Coeure said this week that the bank may "moderately" increase its bond-buying programme in May and June.
It was last down 0.4% on the day at $1.1100.
The Greek government's parliamentary speaker said on Wednesday that Athens will not make a payment to the IMF that falls due on June 5 unless it has reached a deal with its creditors by then.
The dollar was broadly stronger on Wednesday following punchy US housing data on Tuesday, rising to a two-month high against the yen above 121.00 yen.
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Japan's Nikkei stock index ended up 0.9% at a fresh 15-year peak, helped by a weaker yen and data showing the economy grew at a 2.4% annualised rate in the January-March period. That was its fastest pace in a year, beating the consensus estimate for 1.5% growth.
MSCI's broadest index of Asia-Pacific shares outside Japan, however, was down 0.3%.
European shares were mixed following Tuesday's 1.65% surge, unable to draw much of a boost from the euro's weakness against the backdrop of increasing uncertainty over Greece.
The FTSEurofirst 300 index of leading shares was flat at 1606 points, while Germany's DAX, France's CAC 40 and Britain's FTSE 100 were all down around 0.2%.
US futures pointed to a flat open on Wall Street, following its mixed performance on Tuesday. The Dow Jones industrial average eked out a slight gain to close at a fresh record high, while the S&P 500 edged down, although not before touching a record intraday high.
Data showed that US housing starts in April jumped to their highest level in nearly 7-1/2 years and building permits soared, raising hopes that the economy was regaining strength after stalling in the first quarter but also rekindling fears the Fed would raise interest rates sooner rather than later.
"We believe the minutes may describe a conversation regarding the criteria for a rate hike - specifically, a discussion of the developments required to make Fed officials 'reasonably confident' that inflation will accelerate to 2% over the next two-to-three years," Credit Suisse analysts said in a note on Wednesday.
The consensus among economists and traders points to the Fed raising rates in September.
Crude oil futures were off session highs but still took back some lost ground after sinking more than 3% overnight as the dollar strengthened.
Brent jumped 1.6% to $65.05 a barrel while US crude rose about 1.5% to $58.85, after both shed more than $2 a barrel on Tuesday.
