The euro climbed against other major currencies in the European session on Tuesday as European stocks advanced after positive earnings results.
British energy company BP and German lender Deutsche Bank reported better earning results, whereas Switzerland's UBS raised its profitability goal.
Sentiment was also lifted after preliminary data released by statistical office INE showed that the Spanish economy contracted at a slower rate than expected from the second quarter.
Gross domestic product declined 0.3 percent sequentially in the third quarter, after falling 0.4 in the second quarter and 0.3 percent in the first quarter.
The rate of fall in the third quarter was, however, slower than the 0.4 percent fall the government had predicted, and a similar forecast made by economists.
On an annual basis, GDP contracted at a faster rate of 1.6 percent in the third quarter than 1.3 percent in the second quarter. Economists were looking for a 1.7 percent fall.
Eurozone economic confidence dropped less than expected in October, monthly survey from the European Commission showed today.
The corresponding index came in at 84.5, down from 85.2 in the prior month. Economists had forecast the index to drop to 84.4. The marked decreases in industry and construction outweighed the improvement in the retail trade sector.
Consumer sentiment improved to -25.7 from -25.9. Retailers' confidence rose to -17.4 from -18.5.
The European single currency approached a 5-day high of 1.2961 against the U.S. dollar, reversing from an early 4-day low of 1.2887. On the upside, the euro-greenback pair is likely to break key 1.30 level.
Against the franc, the euro recovered from more than a 2-week low of 1.2083 and is worth 1.2094. The euro-franc pair closed Monday's deals at 1.2089.
The euro that fell to a 2-week low of 102.20 against the yen recovered and held steady thereafter. This may be compared to an Asian session's 4-day high of 103.39. The pair was quoted at 103.00 at Monday's close.
The Bank of Japan expanded its asset purchase program by about JPY 11 trillion to prevent the economy from sliding into recession.
The Policy Board governed by Masaaki Shirakawa lifted the size of asset purchase program to about JPY 91 trillion from JPY 80 trillion. The bank intends to complete the increased purchases by the end of 2013.
The euro firmed to a 5-day high of 0.8067 versus the British currency and if the euro rises further, it may break 0.81 level. The pair closed Monday's trading at 0.8051.
Against the Canadian dollar, the euro rallied to a 1-week high of 1.2972. The next resistance level for the euro-loonie pair is seen at 1.30. On Monday, the pair finished trading at 1.2922.
The S&P Case/Shiller home price index for August, the U.S. consumer confidence for October and the Canada industrial product price and raw materials price indexes for September are expected in the North American session.
