The European common currency advanced against majors after a successful bond selling by euro area debt-laden economies and upbeat German report boosted hopes after the S&P downgrade to a number of euro area economies and the EFSF.
Spain auctioned today a total of 4.88 billion euros of bonds in 12 and 18 months maturity, where despite the strong drop in yields and high demand and they sold near the maximum target as the Treasury aimed to raise between 4.0 and 5.0 billion euros.
Also, Greece sold 1.625 billion euros of 91-day bills in an auction that saw a decline in yield to 4.64% compared with 4.68% in December's 20 auction.
The EFSF, on the other hand, sold 1.5 billion euros meeting target after demand was nearly triple the amount tendered of 4.66 billion with the bid-to-cover ratio of 3.1 times.
In fact, the upbeat bond selling managed to offset grim impact of the S&P downgrade to a number of euro area economies, including the top-rated France and Austria, over the weekend and the EFSF yesterday.
Regarding fundamentals, German business confidence surged to -21.6 in the month of January compared with both estimates of -49.4 and the previous reading of -53.8, according to the ZEW survey economic sentiment gauge.
Earlier today, Chinese growth figures showed better-than-estimated expansion of 8.9% expansion in the three months ended December 31 from a year before, compared with forecasts of 8.7%.
Concerning the EUR/JPY pair, it rebounded from 11-year low touched yesterday to trade around 98.10 after recording a high of 98.21 and a low of 97.12.
The trading range for the day is expected among the key support at 96.10 the key resistance at 98.65.
Moreover, the dollar index, which tracks the dollar movements versus a basket of major currencies, fell sharply for the second day with the improvement the sentiment to touch a low of 80.77 compared with the day's starting level of 81.42.
Moving to the GBP/USD pair, it rose on the daily charts, following the general trend in the market.
Data from the U.K. showed that inflation eased on the year ended December to 4.2% from 4.8% which is the lowest since June 2011, moving in line with the BoE's latest inflation forecasts.
The pair is currently hovering around 1.5380 while recording a high of 1.5396 and a low of 1.5308, while the trading range for today is among key support at 1.5125 and key resistance at 1.5555.