The European currency touched a 2 month high against the U.S dollar on Thursday as U.S. and Australian economic data restored faith in the global economic recovery and boosted appetite for higher-yielding currencies.
A report in the United States showing a drop in weekly jobless claims also helped support the euro-zone single currency and other riskier assets. The EUR climbed to as high as $1.2700, its highest since mid-May, and was last up 0.3% at $1.2672.
The EUR also appreciated on speculation that stress tests for European banks were assuming smaller losses on Greek bonds than some investors anticipated. European Central Bank President Trichet said that the publication of stress tests should be followed by action where needed. He also emphasized that the ECB is still providing unlimited liquidity to the financial system. Analysts said that a move to $1.30 in the EUR may hinge upon the results of the stress tests for the European Banks, but Trichet's encouraging words should provide support for the currency in the next few days.