The euro advanced to an eleven month high against the dollar on Monday as investors cheered comments from Eurozone leaders that the worst of the Eurozone crisis is over.

The single currency rallied to a high of $1.3404 against the dollar before easing back to $1.339, up 0.3% on the day.

Risk appetite was boosted by European Central Bank President Mario Draghi's comments about "positive contagion" in European markets as the ECB left the central bank's benchmark interest rate at 0.75%.

Against the yen, the euro flirted briefly with ¥120 for the first time in eight months before later changing hands at ¥119.50.

The dollar index, which measures the greenback's performance against a basket of six major currencies, traded at 79.493 compared to Friday's 79.566.

The dollar rose strongly against the yen following reports that the Bank of Japan would agree to a 2% inflation target. The bank, which currently has a 1% target, would need to further monetary easing.

The increased view that Japan will announce further action to reduce deflation sent the greenback to a high of ¥89.64 yen, before later trading at ¥89.46.

Sterling fell to $1.6078 from $1.6127 the previous session and tumbled to a nine and half month low against the euro amid fears about the UK economic outlook.

The pound came under pressure on Friday after a report from the National Institute of Economic and Social Research said the UK economy shrank 0.3% in the final quarter of 2012.



CJ

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