The European common currency surrendered some of its gains after the European Commission revised down euro area growth forecasts for the current year.

The euro climbed to 2-1/2 month high versus the U.S. dollar after a robust German business confidence report which showed that IFO business climate index rose for the fourth straight month to seven-month high at 109.6 in February from 108.3 in January.

Yet, the euro minimized its gains after the European Commission downgraded its growth outlook for Europe as it expects a contraction of 0.3% for the euro area, down from the previously projected expansion of 0.5% in November.

Olli Rehn, European Union Economic and Monetary Commissioner, said the euro area has entered into a mild recession with the downside revision to growth Rehn explained that prospects have worsened and risks to the growth outlook do remain, but there are signs of stabilization.

Meanwhile, the EUR/USD pair is trading around 1.3295 after it dropped from a high of 1.3342, while the day's low was recorded at 1.3229, where the pair is currently doing attempts to rise above SMA 100 around 1.3305.

The trading range for today is among key support at 1.3025 and key resistance at 1.3455.

The U.S. dollar, on the other hand, pared its earlier drop against a basket of major currencies as it rose to 78.95 following the fall to a low of 78.75, according to the six-currency gauge the dollar index.

Against the yen, the greenback fell from seven-month high to trade around 80.12, where the day's high was seen at 80.35 while the low was touched at 80.02.

The trading range for today is among key support at 78.60 and key resistance now at 81.25.

Moving to the British pound, it advanced versus the greenback as the upbeat German confidence report boosted demand on riskier assets. Data from the U.K. also showed improvement; BBA loans for house purchases rose to 38092 in January from a revised of 36553.

The GBP/USD is in the meantime trading around 1.5707 after touching a high of 1.5723 and a low of 1.5647, where the trading range for today is among key support at 1.5420 and key resistance at 1.5880.