The euro hit its highest in over a month versus a broadly weaker dollar on Monday, with five consecutive days of rallying share prices reflecting less investor caution towards risk.
A Group of 20 finance ministers meeting which ended on Saturday made no specific mention of currencies, but analysts said money promised to help emerging market economies and use of fiscal and monetary power to fight the global downturn had played into improved stock market sentiment.
"The G20 statement just reflects the mood of the market at the moment, if something changes on mood people are reluctant to stand in the way. For now that means the dollar weakens," said Daragh Maher, deputy head of global FX research at Calyon on London.By 1120 GMT, the euro was up 0.9 percent on the day at $1.3037 after hitting its highest since mid-February at $1.3045, according to Reuters data.
The dollar fell to 86.589 against a basket of major currency rivals. Reflecting easing risk aversion, sterling rose in tandem with rallying British shares and was last up 1.4 percent against the dollar at $1.4205.
The dollar was 0.3 percent higher at 98.27 yen after rising as high as 98.50 on demand from Japanese importers. But exporters selling capped further dollar gains, traders said.
This week markets are keeping a keen eye on the Federal Reserve and Bank of Japan policy meetings as central banks turn to exceptional measures to keep interest rates consistently low to stimulate growth.
Traders are waiting to see if the Fed signals after its meeting on Tuesday and Wednesday that it will buy longer-dated Treasuries to help keep interest rates down.
Fed Chairman Ben Bernanke suggested in an interview that the US recession could last most of the year. UBS strategists said in a note to clients that the Fed was likely to be non-committal on buying long-dated debt.
"The Fed has recently shied away from actively talking about quantitative easing, even though the Bank of England and Swiss National Bank have already proceeded with such measures."
Britains central bank has bought gilts, and the Swiss National Bank intervened in currency markets last week to weaken the Swiss franc to stave off deflation. The euro hit a 12-week high of 1.5422 francs on Monday, up around 0.4 percent on the day.
The Bank of Japan also meets this week and may increase its monthly buying of long-dated government bonds to keep interest rates low and help boost the economy, Japans Nikkei business newspaper reported.