The EUR rose to nearly $1.49 against the USD, its highest level since August 2008, just before the demise of investment bank Lehman Brothers' pushed the global banking system to the edge of collapse and sparked a frenzy of Dollar buying by investors eager to dump riskier currencies.

The European currency strengthened on investors' fear that a weak U.S. labor market and a protracted recovery will keep Interest Rates near zero well into 2010.That makes holding low-yielding U.S. dollars unattractive, and any appeal the greenback has would be dulled further if other major central banks start lifting interest rates as growth picks up.

The British pound was within 1 penny of its lowest level in more than 6 months against the EUR after a business group said the Bank of England should expand asset purchases, and as inflation slowed more than forecast. The currency slid to 94 pence per EUR today, for the first time since March 27, before recouping its losses.

Meanwhile, against the U.S. Dollar, the GBP rebounded from the weakest level since May gaining 0.6% to $1.59. The U.K currency declines may be limited, however, as some indicators show signs that the economy is recovering after the central bank cut its benchmark interest rate to a record low of 0.5% and started buying assets to further depress borrowing costs.