Euro rises vs dollar, plus reduced risk appetite for short bets

The euro rose on Monday as an improvement in the attractiveness of risky assets and the dollar hitting attack triggered a short hedges in the single currency, away from their recent lows of four years.

European shares rose sharply after rising in Asia. The U.S. stock futures were up 0.7 percent.

"The dollar was weaker overnight against the euro on the stability of the trust, which helped the currency recover more risk," said Geoffrey Yu, currency strategist at UBS.

"Equity markets globally are performing strongly, especially for supporting the expectation that the relatively expansionary policy will be maintained for a prolonged period globally," he added.

At 1115 GMT, the euro was up around 1 percent against the dollar at $ 1.2231, after touching an intraday high of 1.2258, according to Reuters data.

European shares gained 0.8 percent in early afternoon trading.

But analysts said it was unlikely that the recovery of the euro would take it out of its downtrend, as the structural problems in the euro area, which have impacted the currency has not changed.

"We've seen a good session for stocks. This is favorable to risk, driven by higher-yielding currencies like the Australian dollar. But fundamentally, nothing has changed against the euro," said Kenneth Broux, market economist at Lloyds Banking Group.

Traders said hedge funds have been reducing their short positions on a level of 1.2150 / $ 60 in Asia and across the 1.2220 in Europe.

The euro has lost 15 percent against the dollar so far this year, but gained 1.6 percent last week after hitting a floor of $ 1.1876, its lowest level since March 2006.

Some commented that the appetite for risk was also supported by the authorities such as the chairman of the Federal Reserve Bank of St. Louis Federal, James Bullard, who said he is running a strong global economic recovery.

The Australian dollar advanced almost 1 percent against the dollar to more than 0.8600, its highest level in a month.

The euro was up 1.4 percent to more than 112 yen for the first time in a week.

The dollar fell more than 1 percent against a basket of currencies to 86.446.

Analysts said the dollar could be undermined by so-called U.S. President Barack Obama and his advisers for more incentives to support the economy.

The pound sterling was up 1.2 percent against the dollar at $ 1.4718.