The EUR rallied Thursday after nearing a four-year low against the Dollar overnight, after China denied rumors it was reviewing its holdings of Euro-zone debt. The EUR gained 1.6% to $1.2367 at closing time in New York, from $1.2178 Wednesday. It bought 112.62 Yen after touching 108.84 on May 25th, a nine year low.

While short term investor sentiment seems to have improved, and it looks like the European debt crisis is unlikely to spread outside the Euro-zone, recovery concerns linger. Both credit risk, as well as the needed austerity measures and their implications on the regions recovery are still cause for concern. Furthermore, it is unlikely the ECB will raise interest rates in the near future which puts further pressure on the EUR.