The euro rose to almost two week highs against the broadly weaker dollar on Tuesday, boosted by hopes for a breakthrough between the new Greek government and its international creditors.
EUR/USD rallied 0.87% to 1.1439, the highest level since January 22.
Investor confidence was boosted after the Greek government outlined its plans to renegotiate the terms of its €140 billion bailout with its creditors, backing off from election pledges to demand a debt writedown.
The move eased concerns over a conflict which could lead to Greece’s exit from the euro zone.
Greek Finance Minister Yanis Varoufakis has proposed debt swaps to ease the country’s burden debt, under which creditors would swap outstanding debt for new growth-linked bonds. This could help to reduce the risk of losses on privately held bonds.
Athens also wants less oversight from the troika, which is made up of the European Union, the European Central Bank and the International Monetary Fund.
Three major Greek banks accessed emergency funding available from the ECB on Tuesday, amid a liquidity squeeze, with some depositors withdrawing money amid fears over political uncertainty.
Athens main stock index rallied Tuesday, supporting broader gains in European equality markets.
Meanwhile, the yield on Greek 10-year bonds was sharply lower.
Elsewhere, the euro strengthened against the yen, with EUR/JPY advancing 0.86% to 134.44, off overnight lows of 132.40.
The yen gained ground against the other major currencies earlier in the day, boosted by strong gains against the Australian dollar after the Reserve Bank of Australia unexpectedly cut interest rates to a record low 2.25% in a bid to spur slowing growth.
In other trade, USD/JPY was at 117.67, after falling to lows of 116.88 overnight.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.61% to 94.23, pressured lower by gains in the euro.
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