The EUR rose for the first time in 4 days against the U.S dollar amid bets that its 14 percent drop this year was excessive. The currency's 14-day relative strength index fell yesterday to a threshold that some traders see as a sign it may be poised to reverse course. The 16-nation currency also strengthened after Chinese officials denied a report that the country may be distancing itself from Euro-Zone debt holdings. The EUR extended gains against the Dollar to a session high at $1.2342, up 1.4% on the day after the Chinese comments.

The EUR/USD cross was trading up around 0.8% on the day at $1.2270 from its intraday low of $1.2154. The single currency also rallied 1.5% against the Japanese yen to 110.85 yen, pulling away from an 8-1/2 year low of 108.83 yen on Tuesday. The EUR may extend its gains as investors continue to cover short positions in higher-risk currencies and strengthen to $1.2850.