The euro rose against the dollar and the yen on Tuesday, recovering from two-week lows after a surprisingly strong poll of German investor sentiment raised some optimism about the euro zone economy.
A recovery in European share prices from steep losses the previous day also helped to boost currencies considered to be higher risk which had suffered on Monday. As a result, the dollar and the yen fell across the board.
The euro hit the day's high against the dollar of $1.4155 after the ZEW economic research institute's economic sentiment index rose to 56.1 in August from 39.5 in July, its highest level since April 2006 and beating forecasts for 45.0. [ID:nLI151888]
By 1134 GMT, the pair had retreated to $1.4096, little changed on the day but above $1.4045 hit on Monday, its lowest since late July, Reuters reports.
The ZEW Center for Economic Research in Mannheim said its monthly index, which measures investors' outlook for the next six months, rose to 56.1 points in August from 39.5 points in July — well above the historical average of 26.5 points.
Germany 's export-dependent economy sank into recession last year as the global downturn dried up demand for its manufactured goods , The Associated Press reports.
"After a temporary blip in July, the German ZEW index picked steam again in August," said ING economist Carsten Brzeski.
"The ZEW index now stands at 56.1, from 39.5 in July; this is the highest level since May 2006.
"At the same time, investors have become more positive on the current economic situation." , AFP reports.