Still, traders say rallies are likely to be shallow and the euro will struggle to rise past option barriers around $1.4250, the level it hit on Tuesday for the first time since early November.
The euro was up about 0.3 percent on the day at $1.4125 after slipping to a low of $1.4049 in early European dealing following Moody's announcement that it had downgraded 30 Spanish banks by one or more notches, though notably not the biggest players, Santander and BBVA.
Adding to the euro's woes, Portugal's prime minister quit on Wednesday after parliament rejected his government's latest austerity measures, increasing the chances that the country will need a bailout.
Market participants said the currency was growing resilient in the face of a string of bad news, though this may not be a positive development.
"The euro is becoming increasingly immune to issues affecting the euro zone but the markets may be getting too blase about the risks," said Jane Foley, senior currency strategist at Rabobank.
News that European leaders are unlikely to take a decision on how to strengthen the euro zone's bailout fund at a summit on Thursday and Friday, delaying the process until June, was also seen as a key risk for the single currency.
"We think that no agreement at the EU summit on the bailout facilities should erode EUR support further in the near term." said Valentin Marinov, currency analyst at CitiFX.
"Euro could retrace all of its gains above the $1.40 mark which materialised after the recent heads of state meeting in mid-March. Importantly, we doubt that this will trigger a sell-off in the euro of the kind we saw in the summer of 2010."
The euro was helped by semi-official and Middle Eastern bids around the day's lows and macro account demand. Further bids from the Middle-East were highlighted at $1.4010/20.
The single currency was underpinned by yield differentials as euro zone interest rates are likely to rise in the near-term to counter inflationary pressures, while US rates are set to remain low as its economy struggles.
At the margins the euro also drew support from robust manufacturing and service sector data on Thursday.
European Central Bank Executive Board member Juergen Stark was quoted on Thursday as saying that analysts have made the correct assessment of the ECB's message when it stopped saying that interest rates are appropriate.
But some in the market question the ECB's intent to tighten monetary policy at a time when some euro zone countries are suffering from fiscal issues, an issue which may haunt the euro in the future.
DOLLAR SUPPORTED
The dollar index, which measures the dollar's value against a basket of currencies, was steady at 75.826, clinging to the gains it made on Wednesday.
Against the yen, the dollar held steady from late US trade at 81.00 yen.
Market players are wary that Japan may intervene further to sell the yen if the dollar drops below 80 yen, and especially if such a move occurs in volatile trade as was the case last week, when the yen hit a post-war record high of 76.25 to the dollar in the wake of a devastating earthquake and tsunami and a nuclear crisis.
At the same time, traders say Japanese exporters are likely to sell the dollar on any rallies, helping keep the yen stuck in a thin range against the dollar. Traders cited some selling demand from Japanese exporters around the 81.00 level.