The euro hovered near three-month high versus the greenback after better-than-estimated economic confidence data and before ECB provides banks with cheap loans tomorrow.

A report released today showed that euro area economic confidence rose to 94.4 in February from 93.4 in January, beating forecasts of 94.0. Business climate indicator also showed improvement to -0.18 compared with a prior of -0.21.

The data showed that confidence is restored after the measures announced by euro area officials to combat debt crisis, before an EU summit this week which will tackle expanding European rescue fund.

Moreover, the ECB will allot on Feb. 29 a second tranche of three-year loans to pump liquidity and continue its support to banks, where European banks are expected to ask for 470 billion euros of three-year funds from the ECB in a step that may lengthen a rally in bond markets.

Banks will now be more inclined to use this money -- which was our primary expectation really -- to expand credit into the real economy, ECB President Mario Draghi said following the G20 meeting.

The ECB injection offset the grim news released on Monday signaling that Standard and Poor's lowered Greece's CC long-term and C short-term sovereign credit ratings to Selective Default or SD after the debt-swap deal reached with private sector bondholders last week which includes write down worth 53.5%.

Meanwhile, the EUR/USD pair is trading around 1.3440 after it touched a high of 1.3462, while the day's high was recorded at 1.3389.

The trading range for today is among key support at 1.3230 and key resistance at 1.3615.

The U.S. dollar, on the other hand, fell a against a basket of major currencies as it plunged to 78.35 after touching a low of 78.28, according to the six-currency gauge the dollar index.

Against the yen, the greenback dropped from 9-month high to trade around 80.50, where the day's high was seen at 80.78 while the low was touched at 79.99.

The trading range for today is among key support at 78.60 and key resistance now at 81.65.

Later in the day, eyes will be on U.S. durable goods and consumer confidence reports.

Moving to the British pound, it rose slightly versus the greenback following the general sentiment in the market which is fueled with hopes before the ECB liquidity pumping.

Meanwhile, the GBP/USD is trading around 1.5845 after touching a high of 1.5874 and a low of 1.5811, where the trading range for today is among key support at 1.5585 and key resistance at 1.6075.