The euro rose against the dollar and yen Tuesday, returning to its months-long trend of appreciation, as better-than-expected euro zone data affirmed expectations that the European Central Bank will keep policy steady when it meets this week.
While the euro gained ground, it remained vulnerable to profit taking, especially with its recent sharp and swift move higher drawing the attention of policymakers. French President Francois Hollande called on the euro zone Tuesday to protect the currency from "irrational movements," but German Economy Minister Philipp Roesler said countries must focus on boosting competitiveness and not on cutting the value of their currency.
The comments did not have an immediate impact on the euro, but served as an indication of the growing split among leaders on the euro's strength, and this could check its further gains. Nevertheless, investors bought the euro as upbeat economic data affirmed that the worst of the region's debt crisis is likely over.
The euro zone's battered economy is probably recovering but the gulf between its two biggest members is widening, according to a survey on Tuesday that showed business optimism in the bloc at an eight-month high.