The Guardian newspaper reported that France and Germany have reached an agreement to boost the euro zone's rescue fund, called the European Financial Stability Facility, to 2 trillion euros compared to the current 440 billion.

"That is what's driving this stock and euro rally in the afternoon," said Brian Dolan, chief strategist at Forex.com in Bedminster, New Jersey. "That would be what the market's been looking for and $2 trillion seems to be in the right neighborhood."

The euro hit a session high of $1.3817 after news of the report, according to Reuters data. It last traded at $1.3798, up 0.4 percent on the day.

Against the yen, the euro jumped to a session high of 106.19 and last traded at 105.94, up 0.4 percent on the day.