The euro rallied sharply while the dollar fell on Tuesday as better-than-expected economic data boosted appetite for risk, though analysts cautioned the euro will remain pressured on sovereign debt concerns and low growth in the eurozone. The euro strengthened in the US session as investors increased their risk exposure after a report showed the pace of growth in the US manufacturing sector accelerated in December at its fastest rate since June.
The euro rose 1 percent higher on the day to $1.3058, pulling away from its 2011 trough of $1.2858 hit last week on trading platform EBS. Against the yen, the euro rose 0.7 percent to 100.11 yen . It fell to 98.71 yen in holiday-thinned trade on Monday, its lowest since 2000. The dollar dipped 0.3 percent to 76.66 yen, not that far from the record low of 75.311 yen hit in late October on EBS.