The euro rebounded from a one-month low against the US dollar on Thursday as signs of political progress in Rome helped steady Italian bond yields. Italian bond yields fell back from Wednesday's record highs of around 7.5 percent but remained elevated, just below the 7 percent level seen as unsustainable. At a sale of 1-year treasury bills, Rome paid a 6.087 percent yield, the most in 14 years, but placed the full planned 5 billion euros.
In early afternoon New York trade, the euro was up 0.5 percent at $1.3608 after hitting a session high of $1.3652, according to Reuters data. One-month risk reversals in euro/dollar - a gauge of the premium demanded to buy bets on a currency falling or rising - rose to record high levels around 4.15 vols in favour of euro puts, or bets on it falling. Against the yen, the euro was up 0.1 percent at 105.58 yen while the dollar fell 0.3 percent to 77.58 yen.