The euro hit a session peak against the dollar above $1.26 on Tuesday, boosted partly by better-than-expected corporate earnings and a wider U.S. trade deficit in May.

A smooth Greek T-bill auction also helped offset another credit rating downgrade for Portugal, traders said.

The euro rose 0.3 percent to $1.2633 EUR=, a session peak, after falling to a one-week low of $1.2523 after Moody's Investor Service's cut Portugal's debt rating by two notches.

(Reporting by Steven C. Johnson; Editing by Theodore d'Afflisio)