The single currency continued its recent strong run after a positive review of Greece's accounts by international lenders on Friday allayed fears of a near-term default and opened the way for an injection of fresh funds.
The prospect of extra aid, totalling up to $100 billion euros ($146.4 billion) according to German news magazine Der Spiegel, will not answer the question of Greek solvency in the longer term but would buy more time for the regional laggard.
Key for the euro, it also leaves the path open for a further near-term rate hike as the European Central Bank looks to rein in inflation. The ECB is expected to signal a July increase at its policy setting meeting on Thursday.
"We believe that the ECB is set to signal on Thursday that the next rate hike will be in July and this positive interest rate dynamic will continue to help the euro," said Elsa Lignos, currency strategist at RBC Capital Markets.
The euro was trading at $1.4622 at 0806 GMT, with a test of $1.50 expected in the coming weeks if the currency can push through resistence at $1.4710.
"The provisos are that US equity markets fail to undergo a deeper correction and that Greece's political opposition does not scupper fresh austerity measures," BNP Paribas strategists wrote in a report.
Greece's cabinet is due to debate the austerity plans on Monday as popular protests swell.
"A move higher towards our target of 1.5000 also requires that the ECB issue the requisite code word signalling July tightening after Thursday's Council meeting."
The addition of a sharply weaker US non-farm payrolls number on Friday to a growing batch of weak economic data buoyed the euro and other major currencies against the dollar, although by 0806 GMT the dollar index had recovered to trade flat.
Concerns over the outlook for growth in the world's largest economy sent Asian shares down overnight and also underpinned fresh falls for European stocks at the open, with the FTSEurofirst 300 down 0.5 percent by 0807 GMT.
After starting the year strongly, the index is down 1.2 percent in the year to date, with many observers expecting rangebound trade over the summer.
"After Friday's poor economic data the pressure is on the downside for European equities," Manoj Ladwa, senior trader at ETX Capital, said. "But the index could find some support near the 1,100 mark."
"This figure is near its low of April and represents a number which the market has previously bounced off."
Emerging market stocks were also lower in early trade, down 0.1 percent, while the MSCI world equity index was down 0.1 percent and the Thomson Reuters global stock index was 0.3 percent weaker.
Prospects for reduced demand from the United States also weighed on crude futures in early trade, with the European regional benchmark's July contract down 0.8 percent by 0809 GMT.
A meeting of OPEC later in the week could see the group lift its oil production targets, although leading member Saudi Arabia is likely to face tough opposition in its push to raise supply from hawks Venezuela and Iran. The jobs data and weaker dollar also fuelled fresh gains for gold in Asian trade, with spot gold at around 1,544.30 an ounce and targeting technical resistence at around $1,550 an ounce.
BUNDS
Bund futures were slightly higher in early trade as the prospect of a fresh aid package for Greece was more than offset by broader concerns over global economic growth.
At 0814 GMT, the Bund future was 2 ticks higher at 125.46.
In spite of the early move higher, however, the prospect of fresh aid for Greece could yet pressure safe-haven debt in the short-term.
"The bearish bias could continue for a little bit ... We should see further relief as (a second) bailout package is somehow shaping up," said Commerzbank strategist Rainer Guntermann.
"This is what the market is starting to anticipate so there's probably some more downward correction in store.
Copyright Reuters, 2011