The euro is once again under pressure as the impasse over the Greek debt crisis continues

-The euro is once again under pressure as the impasse over the Greek debt crisis continues, putting even greater importance on key decisions within and outside the country for the path of the single currency.

Investors are still holding out for Greece's funding problems to be resolved, a factor which is shoring up the currency. But expectations that crisis negotiations over the weekend would yield a firm solution were dashed. Instead, European Union authorities have put off the decision, hoping for a mid-July end to protracted talks.

The euro succumbed to an early bout of selling Monday, slipping to a session low of $1.4191 against the dollar before coming back above $1.42. But while the outlook for the currency looks uncertain, the prevailing sentiment is still relatively sanguine. Most investors are betting that there is too much at stake for the euro zone as a whole to let Greece default on its loans.

Athanasios Vamvakidis, a currencies strategist at Bank of America Merrill Lynch, said the cost of allowing Greece to fail is too high, which should in the end help support the euro. "The baseline is we expect a 'V shape' for the euro's exchange rate versus the dollar."

Key tests for the common currency ahead include a confidence vote for the new Greek government Tuesday. If there is a vote of no-confidence in the new governmment that all bets are off, as the country would struggle to concoct the cost-cutting measures needed in return for international aid. A further Greek budget vote is scheduled for June 28.

"The internal dynamics of Greek politics inject uncertainty into the whole process, and from the perspective of financial markets threaten fresh volatility as well as the risk of contagion, with the worst case scenario being a Lehman-style [event] for the euro zone," said Neil MacKinnon, strategist at VTB Capital.

"Whatever short-term compromises might be reached in the next few weeks, they are unlikely to mark the end of the euro zone's debt and banking crisis."

That in turn means a period of volatility for the single currency.

These developments are dominating currency market movements, especially as the week starts very slowly on the data front. But another reason for the euro's resilience could be the U.S. Federal Reserve's rate verdict and press conference, due Wednesday.

Analysts at BNP Paribas noted that U.S. rate setters are likely to stick to a less aggressive stance on inflation, a factor that will weigh on the dollar especially against the yen.

What happens in Greece may also have repercussions outside Europe, affecting wider confidence levels. Minutes of the Australian central bank's last rate-setting deliberations Tuesday may give a hint whether markets are correct in scaling back rate-rise expectations.

Elsewhere, the pound held steady despite the continued flow of soft U.K. economic data. The focus will be on the minutes of the Bank of England's June meeting Wednesday, to see if the recent run of data has weakened the resolve to lift interest rates.