The euro rallied against its major counterparts ahead of euro summit, markets seem pricing-in a deal for Greece next week, following European officials comments Wednesday that their third attempt to unblock the next bailout tranche for debt-stricken Greece will likely succeed.
Optimism over the U.S. fiscal budget deal has also supported the euro and eased risk, after leading U.S. legislators expressed confidence that they could reach a deal to avert the so-called fiscal cliff lifted investors sentiment.
The euro zone flash manufacturing index rose to 46.2 up from 45.4, supported by improvement in Germany's and France's manufacturing activities. On the other hand, the service sector PMI unexpectedly dropped to 45.7 from 46.0.
The EURUSD pair touched an intraday high at 1.2866, and pushing to the upside. Technically speaking, the pair has reached key resistance areas, and major short term barrier at 1.2875-1.2900. Holding back above this region would indicate further gains ahead for the euro over the upcoming period. However, we may see renewed pressure from below 1.2900, settling back below 1.2820 may confirm another leg lower.
Elsewhere, china's purchasing managers' index rose to 50.4, the highest level in more than a year, hinting the economy could be heading back to growth following a long period of slowdown.
The overall positive sentiment added to pressure on the Japanese yen, which fell against most of its major counterparts.
The Japanese Yen has been under major pressure after speculation that opposition leader Shinzo Abe is tipped to become the new prime minister , his comments regarding aggressive monetary easing raised speculation that the central bank will be forced to intervene further to depreciate its currency and stimulate the economy.
The EURJPY hit a 6-1/2 month high , and fluctuating around a key multi-year descending trend line, around 106.25, where it might find some resistance, however the pair has broken a key static resistance at 104.50-104.60, and thus holding above 106.00 now clears the way to 108.00 level as the next potential stop.
