The single currency rallied versus U.S. dollar and the Japanese yen on the release of unexpected jump in U.S. pending homes sales together with the fresh stimulative measures by central banks worldwide.

U.S. pending homes sales rebounded in December as buyers took advantage of lower prices and mortgage interest rates. The Nation Association of Realtors Pending Home Sales Index rose by 6.3% to 87.7 in December from previous month’s reading of 82.50.

Eurozone producer price in December fell by 1.3%, higher than the expectation of 1.1% decrease. German retail sales unexpectedly fell by 0.2%, versus the forecast of an increase of 0.5% and the downwardly revised 0.1% drop in November. The single currency weakened briefly to 1.2801 before rallying to 1.3058 on the better-than-expected U.S. pending homes sales data.

The Fed cited ‘continuing substantial strains in many financial markets’. The Fed increased the end date from April 30 to Oct 13 on five emergency-lending programs, along with swap lines with 13 other central banks of Australia, Brazil, Canada, Denmark, U.K., eurozone, South Korea, Mexico, New Zealand, Norway, Singapore, Sweden and Switzerland. The premium that European financial institutions are paying to obtain dollar-denominated funding narrowed after the Federal Reserve extended foreign currency- swap lines to other central banks.

The Reserve Bank of Australia cut interest rates by 100 basis points as widely expected to a record low of 3.25%. The Australian government also unveiled a $26.5 billion second stimulus package on Tuesday. The Australian dollar weakened briefly to 0.6496

Wednesday will see the release of U.K. Nationwide consumer confidence, German, eurozone and U.K. services PMI respectively, eurozone retail sales, U.S. ADP employment and ISM non-manufacturing.