The euro rose for a third straight session against the dollar on Tuesday, underpinned by expectations the European Central Bank is prepared to act soon to lower borrowing costs for Spain and Italy. The Australian dollar also rose to its highest in more than four months against the greenback after the country's central bank kept interest rates unchanged at 3.5 percent and dropped few hints about easing soon.
In midday New York trading, the euro climbed 0.2 percent to $1.2423. It hit a one-month high of $1.2443 on Monday. There was also reported talk of an options barrier at $1.2450. The Australian dollar was flat on the day versus the dollar, after hitting a high of $1.0604, its strongest since March 20. The US dollar rose 0.6 percent to 78.72 yen, staying above a two-month low of 77.90 yen struck last week.