The euro advanced to a two-week high against the US dollar on Thursday as a solid Spanish debt auction and improving risk tolerance prompted investors to reduce overextended short positions on the single currency. Analysts, however, believed the euro's gains are temporary and its downtrend could resume on any negative news out of the euro zone.
For now though investors were only too happy to unwind their bearish trades on the euro as they prepare to reload their short positions once the upturn runs out of steam. In midday New York trading, the euro was up 0.4 percent on the day at $1.29040 after traders said stops were triggered on the break of Friday's high of $1.28790 en-route to a two-week high of $1.29275 on trading platform EBS.
Against the yen, the euro fetched 99.549 yen, up 0.8 percent, after hitting a two-week high of 99.560 yen on EBS. It has gained more than 2 percent since hitting an 11-year low of 97.04 on Monday. The euro was little changed against the Swiss franc at 1.20780 francs, within striking distance of the Swiss National Bank's 1.20 floor. That level is likely to be strongly defended by the SNB if threatened by a renewed attack on the euro.
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