The euro climbed against the dollar after putting in a strong performance in New York trading on Monday and recording its second successive daily rise.
The single currency soared to a one-month high against the greenback in earlier trading, while the rise marks its strongest two-day gain on the dollar for over nine months. Trading was said to be choppy during European trading, but it was in the US session where it began to climb as gains in stocks improved risk sentiment.
Aroop Chatterjee, a senior currency strategist at Barclays Capital, explained that investors have higher hopes regarding Europe at present as they are of the opinion that the proposed ECB plan to buy bonds so as to help Spain and Italy reduce their borrowing costs can bring about positive rewards.
He went on to explain that European assets have been fairly depressed during the past few weeks meaning the euro is now benefitting from the fact that risk aversion has eased.
The common currency had gained 0.2 per cent on the dollar to $1.2414 by midday trading, just below its high hit during Asian trade of $1.2443. The currencyâ€™s gains over the past two days are at almost two per cent, its strongest two-day performance since October.